As noted in our earlier article, "Proposed Amendments to Financial Benchmarks’, the Monetary Authority of Singapore (MAS) released its consultation paper for the Proposed Regulatory Framework for Financial Benchmarks on 14 June 2013. In the specific context of interest rate manipulation, the MAS proposed that manipulation of any financial benchmark administered in Singapore should be sanctioned with criminal liability in certain circumstances. Is this part of a wider global trend?


After the bursting of the US housing bubble, the worst financial crisis since the Great Depression and multitrillion US dollar bank bailouts, public attitudes towards bankers are at an all time low. Buttressing this public disapproval are the numerous scandals involving banks relating to, amongst others, the manipulation of LIBOR (and other rates) and the laundering of Mexican drug cartel money last year. The banks have faced a backlash in terms of fines and public vitriol; but what about the bankers themselves? And what of the lawyers who are now tasked with assessing the situation?

A recent development in many countries is to look behind the banking corporations themselves and the corporate veils that they provide to their employees. The question that is now being asked is, "Can and should we go after the individuals running the banks?"


On 12 June 2013, the UK Parliamentary Commission on Banking Standards (the UK Banking Commission) printed its Fifth Report titled "Changing banking for good" (the Report). The UK Banking Commission recognised the banking sector’s crucial role in supporting the economy and maintaining international pre-eminence, but concluded that this role had been significantly eroded by a "profound loss of trust born of profound lapses in banking standards".

The proposals in the Report are targeted at what the UK Banking Commission has identified as one of the system’s key failures: the flawed framework of individual responsibility. The UK Banking Commission proposed a "Senior Persons Regime" that assigns key responsibilities within banks to specific individuals, alongside a "Licensing Regime" which applies to other bank staff whose actions or behaviour could seriously harm the bank, its reputation or its customers.

The UK Banking Commission suggested that a more effective sanctions regime against individuals would be useful in facilitating and implementing the two aforementioned regimes.

A chain of command was suggested so that a senior individual who has been assigned key responsibilities cannot absolve himself of those responsibilities even where tasks are delegated. Where the banking corporation as a whole has experienced a failure, the relevant Senior Person must demonstrate that he took all reasonable steps to prevent or mitigate the effects of the failure. An inability to do so would result in possible individual enforcement action, with the burden of proof switching away from the regulators and onto the individual.

Crucially, it was proposed that a criminal offence should be established applying to Senior Persons carrying out their responsibilities in a reckless manner, which could carry a prison sentence, on top of the civil action that may lie against that person.

It is important to note at this stage that these proposals are not yet part of the law of the UK. That being said, on 19 June 2013, UK Prime Minister David Cameron announced that the central recommendation regarding reckless misconduct of bankers will be introduced in an upcoming Parliamentary amendment bill. Therefore, the likelihood of this eventually becoming the law in the UK is relatively high as there appears to be widespread political approval of the measures.

This change in approach to targeting individual bankers has been seen in other parts of the world as well. Even though in the US full scale prosecution of individuals is yet to occur in light of settlement agreements entered into between banks and the US Department of Justice, US political opinion may be shifting. During a US Senate banking committee hearing in February 2013, committee member US Senator Elizabeth Warren questioned the prevailing policy to not prosecute individual bankers for what would otherwise attract criminal sanctions. Fining the banks alone, she argued, would not provide any incentives to bankers to carry out their professional duties responsibly.

Hong Kong has also taken steps to assess the extent of interest rate manipulation, and is assessing preventative measures. In the specific context of initial public offerings, Hong Kong regulators have proposed that bankers may face prison sentences for giving misleading information in share-sale documents, thus elevating the importance of proper due diligence. Although the Hong Kong proposals don’t appear to go as far as those of the UK, it is interesting to observe that attitudes towards bankers across cultures and jurisdictions are changing.


It remains to be seen what the final form of the UK legislation on this issue would be – specifically on the burden of proof and standard of care, and whether it will be adopted more widely and in Singapore. Nevertheless, these wider global trends and the imminent changes herald a new age of increased individual responsibility and accountability, which given the intertwined nature of global financial markets, are likely to take a similar form in various financial centres.