A couple of days ago Robinhood, the US broker that made its name during the meme stock frenzy in 2021, was warned it is facing regulatory action.
The US Securities & Exchange Commission – a paper tiger or a tyrant of a regulator depending on who you believe – issued what is known as a Wells notice regarding the firm’s cryptocurrency business.
It serves to warn the company and investors that legal action, likely resulting in a fine, is in progress.
Robinhood expressed its public disappointment over the matter, but probably accepts what’s coming. Everyone who cares to know now has the information.
In stark contrast, the City’s watchdog the FCA has faced abuse from ministers including chancellor Jeremy Hunt over its plan to “name and shame” companies under investigation for malfeasance.
For a start, this is none of his business. Even if it were, he is wrong-headed.
The FCA, which doesn’t have a great track record of stopping frauds early, just wants to alert the market sooner than usual that it is concerned about some practices, or some companies.
Hunt fears this could hurt the UK stock market, which would make sense if the UK stock market were a picture of health while Wall Street were struggling.
The opposite is true. The FTSE might be hitting new highs, but they are low highs and are more to do with currency movements (big UK companies make a lot of money in dollars) than renewed optimism about UK plc.
What Hunt and others are arguing for is less transparency, for sweeping things under the regulatory carpet in the hope they are never found.
It would be so much better if the City and investors saw tough regulation from the FCA as a strength, as a reason to do business in London rather than a hindrance.
The watchdog has this right and should stick to its guns. Sadly, I bet it caves in.
