FSCS reports that it has considered the role of some IFAs in relation to the firm, and believes that eligible claims may exist. It has found some failed IFAs may be liable for losses suffered by consumers where mis-selling can be shown to have occurred. (29/02/12) FSCS > CF Arch Cru update

FSA has published finalised guidance on distributor-influenced funds for distributors using distributor-influenced funds and finalised guidance for firms that help distributors run distributor-influenced funds or offer them through products or platforms, together with a summary of feedback received.

The purpose of this document is to promote common supervisory approaches and practices in the application of the guidelines on a common definition of European money market funds developed by CESR by providing responses to questions posed by the general public and competent authorities. Originally published in August 2011, it has now been revised to include new questions. (22/02/12)

The Council has adopted a regulation on short selling and certain aspects of CDS which introduces common EU transparency requirements and harmonises the powers that regulators may use in exceptional situations where there is a serious threat to financial stability.

Lewis Chastor and Pentagon Capital Management have been charged by the Securities and Exchange Committee with late trading in mutual funds. The action is in line with increased vigilance over market abuse as announced by New York Attorney General Eliot Spitzer. Judge Sweet acquitted the firm of market timing abuse but rules that Pentagon had ‘intentionally and egregiously’ violated securities laws with regards to late trading.

ESMA is seeking comments on its technical advice regarding the above. Section I specifies the definition of when a natural or legal person is considered to own a financial instrument for the purposes of the definition of short sale (Article 2(2)). Section II relates to the net position in shares or sovereign debt covering the concept of holding a position, the case when a person has a net short position and the method of calculation of such a position including when different entities in a group have long or short positions or for fund management activities related to separate funds (Article 3(7)). Section III sets out the advice on the cases in which a CDS transaction is considered to be hedging against a default risk or the risk of a decline of the value of the sovereign debt and the method of calculation of an uncovered position in a CDS (Article 4(2)). Section IV defines the initial and incremental levels of the notification thresholds to apply for the reporting of net short positions in sovereign debt (Article 7(3)). Section V specifies the parameters and methods for calculating the threshold of liquidity on sovereign debt for suspending restrictions on short sales of sovereign debt (Article 13(4)). Section VI sets out ESMA’s proposal of advice on what constitutes a significant fall in value for various financial instruments and also specifies, in the form of a draft RTS, the method of calculation of such falls (Article 23(7) and (8)). The full text of the draft RTS is in Annex IV. Section VI specifies the criteria and factors to be taken into account by competent authorities and ESMA in determining when adverse events or developments arise (Article 30). Responses are required by 9 March 2012. ESMA expects to publish a final report and submission of the draft advice on Delegated Acts to the European Commission by mid-April 2012.

This report is intended to assist national supervisors in gaining a better understanding of the use of intra-group support measures in times of stress or unexpected loss by financial groups across the banking, insurance and securities sectors. It provides an overview of the use of intra-group support and it is noted that it may also assist thematic work contemplated by FSB on deposit insurance schemes and feed into the ongoing policy development in relation to recovery and resolution plans. The report is based on the findings of a high-level stock-take which examined the use of intra-group support measures available to 31 banks, insurers and securities firms headquartered in Europe, North America and Asia and provides an overview and analysis of the types and frequency of intra-group support measures used in practice.

ESMA has published the responses to the above-mentioned consultation, which are available to download inpidually via the second link. It is noted that ESMA expects to publish a final report and submission of the draft technical standards to the EC by 31 March 2012 for endorsement.

FOS has published the text of a provisional decision upholding a consumer's complaint about a bank's advice to invest in AIG funds, which sets out its general approach to this kind of case.

The delegation of market monitoring from the Central Bank of Ireland to the ISE has ended as of the 31st of January. The Central Bank will now conduct market surveillance and market abuse enquiries with regards to investment funds listed on the MSM.