Friday, September 28, 2007

Tough justice in Scandinavia

An investment bank in Sweden inflates profits by overstating trading positions. When the truth is revealed, it has to write down profits by a huge amount.

The price for this sort of behaviour? The regulator asks the entire board to step down, not just the CEO. That's the sort of tough justice you find in Scandinavia- it's hard to think to sounder corporate governance norms elsewhere in the world. FT reports:

Carnegie in May said its net profits from 2005 to 2007 would be cut by SKr227m after three employees had inflated profits by overstating trading positions. The bank eventually took a SKr315m write-down as a result of the scandal.

”All this is very serious. We could have pulled their licence, but we see that there is hope that their measures are sufficient,” said Ingrid Bonde, director general of the regulator.

”We demand that the board replaces the CEO who must not be allowed to remain a board member either. The guidance and control which we have criticised involves the entire bank and the bank management,” Ms Bonde said at a news conference.

1 comment:

Anonymous said...

A correction : The country in question is Sweden. It was the Finansinskpektionen(FI), the Swedish Financial Services Authority that struck the verdict. According to the following news article it isn't clear that the entire board was fired. (