Financial Times: French jealous of powers in US and UK: “However, the French were sceptical about a system that allowed companies to escape admission of guilt in return for paying a fine. Shell, for instance, did not admit or deny the FSA's findings that it breached UK rules on market abuse and listings.” (ShellNews.net)
By Martin Arnold in Paris
Published: September 7 2004
The president of the French market watchdog has been impressed by the power of US and UK financial regulators to impose big fines on companies as part of plea-bargain settlements and wants to do the same.
Michel Prada, president of the Autorité des Marchés Financiers (AMF), said the regulator's college of directors had discussed the need to bolster its power to punish breaches of financial law and was planning a more in-depth study.
He bemoaned the fact that the AMF did not have the "fearsome system of compromise or settlement", which is often employed by the Securities and Exchange Commission in the US and the Financial Services Authority in the UK to settle probes into market and financial infractions.
Both the SEC and the FSA have been beefing up their policing policies since the Enron scandal broke in 2001, meting out increasingly large fines, such as the $120m and £17m ($30.2m) penalties they imposed respectively on Royal Dutch/ Shell, as part of a settlement with the oil group in July.
"When you see the SEC has settled with such and such company for a fine of $350m or $450m, you are tempted to do the same thing," said Mr Prada. "The question is to decide whether there is merit to a system of settlements, to save time and avoid a long and costly legal procedure."
He said the AMF would also need to increase its maximum fine limit for offences where no profit was clearly gained, such as misleading the market, from its current €1.5m ($1.8m) level to make the settlement process credible.
The AMF, formed last November with the merger of France's market and financial regulators the COB and the CMF, has already undergone reform of its sanction procedure to bring it in line with European law by separating its investigative and sanctions branches.
Mr Prada said his idea of stronger sanctions was "a very big reform in a very delicate area, and we are a long way from achieving it yet". He said it would require support from the justice ministry and a new law.
However, the French were sceptical about a system that allowed companies to escape admission of guilt in return for paying a fine.
Shell, for instance, did not admit or deny the FSA's findings that it breached UK rules on market abuse and listings. Several French businessmen were outraged at the plea-bargaining tactics in the US that forced French interests to pay a record $770m fine to settle accusations over the Executive Life affair.