FSA Was Warned About Kaupthing, Former Executive Says

Posted 04/02/2009 - 01:16 by Hoping and coping

0
Your rating: None
2009-02-03 16

The U.K.’s Financial Services Authority failed to heed warnings about Kaupthing Bank Hf’s management three years before it collapsed, the former head of a unit acquired by the Icelandic bank told a British Parliamentary committee.

Tony Shearer, former chief executive officer at Singer & Friedlander, said he contacted the British financial regulator in April 2005, when Kaupthing agreed to buy the London-based investment bank for 447 million pounds ($637 million).

“The questions that we raised were about the quality of earnings and the way” Kaupthing was managed, he told the House of Commons Treasury committee in London today. “Those were things I passed on to the FSA.” The Reykjavik-based lender “ran their business in a strange way,” he added.

Shearer was also surprised by the FSA’s employees, who he described as “incredibly young” and “very inexperienced.”

[Continues]

The FSA declined to comment immediately on today’s testimony. A message left with the Kaupthing press office seeking comment on the hearing was not immediately returned.

Shearer resigned from the board of Singer & Friedlander before the offer went to shareholders; he turned down an offer to become executive chairman. Shearer “was not prepared to be responsible to the FSA for a company that was owned by Kaupthing,” he said in written testimony.

[Continues]