Out-Law News 1 min. read
07 Dec 2011, 9:00 am
Richard Alderman told the Sunday Telegraph that current rules made it almost impossible to prosecute financial institutions because it was hard to prove that the heads of companies knew about specific wrongdoing.
"If we want to prosecute a financial institution we have to prove that the directing mind of the institution was involved in the fraud," said Alderman. "But how often does the top management get involved? They create the culture, they make these things possible but the actual activities will be dealt with at a lower level. We cannot touch the financial institution in those circumstances. I believe that is wrong.
Alderman said that he has been "pushing ... to MPs" the idea of changing the law so that institutions can be prosecuted when staff act recklessly in their business dealings, such as in the trading of collateralised debt obligations (CDOs), one of the financial instruments widely blamed for triggering recent economic turmoil.
"What I am thinking of is some kind of offence of being involved with recklessly running or being involved in the running of a financial institution," he said in the interview. "We are thinking about banks, CDOs. I have been pushing this to MPs."
Alderman said that he thought the idea would attract public support because "members of the public have been talking about the need for criminal law to play more of a role in the City".