Law, Financial Regulation and Compliance
This course enables participants to identify legal and regulatory risks entailed with «pathological situations» in a banker’s daily business practice – may they arise in the context of private banking, wealth management or investment banking. The course not only covers the contents of a banker’s “classical” Compliance manual (e.g., anti-money laundering, anti-corruption laws, insider trading & market abuse) but it also intends to raise awareness for the importance of ethical behavior and of an improved corporate culture in the banking & finance industry.
Description / Program
Chapter 1: Legal & Economic Foundations
The first chapter sets the stage with a sound, interdisciplinary introduction to the principles of financial regulation, supervision & enforcement: It treats the economic fundamentals of financial regulation and explains the theoretical concept of “market failure”. Real-life cases where market failures provoked new regulation (e.g. high frequency trading, complex structured products) are used to illustrate economic theory. Students will also be introduced to the idea of the “regulatory toolbox”, i.e. the variety of legal instruments which can be used to regulate and supervise financial institutions, such as banks, brokers or asset managers. Real-life cases will be used to clarify the requirements of, among others, the “fit & proper test” for managers of financial institutions or the organizational requirements for financial institutions. A special focus lies on regulatory sanctions applied to enforce financial regulation (e.g. professional bans, naming & shaming or professional bans). Again, case studies and interactive group work will be used to illustrate these regulatory concepts. Overall, the approach is comparative and covers several jurisdictions. An interactive discussion treats the value of regulatory competition between financial centers and it also highlights the dangers of new policy tendencies, such as neo-interventionism and neo-protectionism. The chapter concludes with an update on the most recent developments in the era of International Financial Standards – covering e.g. Stable Coins or Climate Change-related regulation.
Chapter 2. Legal Risk & Compliance in Private Banking & Asset Management
This part of the course is dedicated to the rules & regulations governing asset management services offered to various segments of clients (from retail to professional). The chapter first explains the duties arising from the code of conduct under EU-MiFID II & Swiss-FIDLEG and it further gives a short overview on the rules governing the distribution of financial products to retail investors (EU-PRIIPs). The focus lies on strategies to avoid, respectively, manage conflicts of interests, e.g. when it comes to kick-backs and other inducements. Another important part of this chapter treats the highly relevant topics of anti-money laundering regulation & the fight against corruption and terrorism financing. Again, students will analyze real-life cases so as to raise their awareness for regulatory risk with which they would likely to be confronted with in their future careers as compliance officers or client advisors working in private banking or asset management.
Chapter 3. Legal Risk & Compliance in Investment Banking & Securities Trading
The last chapter discusses legal risk and compliance issues in the areas of investment banking and securities trading. Topics which will be illustrated with real-life case studies include fraud risk in trading (rogue trader-case), conflicts of interests (creeping tender-case) as well as liability risks associated with Initial Public Offerings (IPOs; prospectus liability-case). A first in-depth discussion covers reflections on the growing importance of individual ethical behavior and an improved organizational culture in financial institutions. The second discussion will point at the controversy regarding the limits of self-regulation – a topic which gained much attention after high frequency traders had allegedly caused several technical glitches on stock exchanges worldwide (Flash Crash-case). The chapter concludes with an outlook on the challenges and opportunities of technological innovations (FinTech & RegTech), chiefly the regulatory implications of initial coin offerings and the challenges of global Stable Coins (envion-ICO-case; Libra).
Learning Method / Style of Lessons
Class attendance is mandatory. There will be a mixture of classroom teaching and shorter break-out sessions where real life-case studies will be analyzed in small groups. Other interactive elements include discussions on current policy developments where PRO and CON arguments will be developed in class.
Compliant with COVID-19 guidelines
Depending on the number of participants, there will be either an oral or a written exam at the end of the course. Candidates may use a set of pre-specified resources (mainly regulatory norms) and will primarily be asked to analyze cases or to discuss problem questions (e.g. PRO/CON argumentation).
Couse language and all course materials will be in English. Power Point Slides covering the contents of the course will be made available on iCorsi. Furthermore, specific readings materials for case studies will be assembled for each Chapter.
Participants are not required to buy a specific textbook. Reading materials will be provided on iCorsi for each Chapter.