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Template:Regulator requests: Difference between revisions
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====Obligation to notify provider of regulator requests==== | ====Obligation to notify provider of regulator requests==== | ||
This is a common and oft accepted provision: where you are obliged to disclose to a regulator, you must first notify the provider of the information, to allow them to make | This is a common and oft accepted provision: where you are obliged to disclose to a regulator, you must first notify the provider of the information, to allow them to make representations, or try to get an [[injunction]], to prevent disclosure. However excitable your [[counterparty]] is on this point — and junior lawyers at real money firms can be quite exciteable — resist this. It is potty. When you step through it, it is hard to see any real-world cases where your [[counterparty]] could or would actually try to stop disclosure to a regulator, and plenty of benign circumstances where disclosure is a matter of course. To wit: | ||
*'''[[Trade reporting|Trade]]/[[transaction reporting]]''': [[Broker]]s will be obliged to disclose a lot of trade-specific client information to regulators and exchanges every day on account of {{t|MiFID}}/{{t|EMIR}} [[Trade reporting|trade]] and [[trade reporting]]. We are not going to repeatedly tell the client that. | *'''[[Trade reporting|Trade]]/[[transaction reporting]]''': [[Broker]]s will be obliged to disclose a lot of trade-specific client information to regulators and exchanges every day on account of {{t|MiFID}}/{{t|EMIR}} [[Trade reporting|trade]] and [[trade reporting]]. We are not going to repeatedly tell the client that. | ||
*'''Ad-hoc ''general'' information requests''': Outside [[Trade reporting|trade]]/[[transaction reporting]], when regulators ask for [[ad hoc]] information from a [[broker]], it is usually for a wide-ranging data set across whole trading books and sectors, covering multiple clients. It is unrealistic to accept [[Brokers]] to monitor which clients within that population have confis, much less a right to be specifically notified beforehand. Nor will they want to go to the trouble of getting all those consents. Why? BECAUSE LIFE IS TOO SHORT. | *'''Ad-hoc ''general'' information requests''': Outside [[Trade reporting|trade]]/[[transaction reporting]], when regulators ask for [[ad hoc]] information from a [[broker]], it is usually for a wide-ranging data set across whole trading books and sectors, covering multiple clients. It is unrealistic to accept [[Brokers]] to monitor which clients within that population have confis, much less a right to be specifically notified beforehand. Nor will they want to go to the trouble of getting all those consents. Why? BECAUSE LIFE IS TOO SHORT. | ||
*'''Ad-hoc ''client-specific'' information requests''': Where a regulator specifically asks for data on a single client, it is likely the regulator will also have made equivalent disclosure requests to the client at the same time (or copied the client on those requests to the [[broker]]) — if the request is benign — and if it has not, the investigation is likely to be one where the regulator would not allow the [[broker]] to alert the client anyway, and indeed where such notification could be a criminal offence (market abuse, etc). Even where the notification clause carves out where “notification being illegal” this leaves the [[empty set]] of circumstances where the [[broker]] would have to give info about a specific client and the client doesn’t, but was entitled to know about it. | *'''Ad-hoc ''client-specific'' information requests''': Where a regulator specifically asks for data on a single client, it is likely the regulator will also have made equivalent disclosure requests to the client at the same time (or copied the client on those requests to the [[broker]]) — if the request is benign — and if it has not, the investigation is likely to be one where the regulator would not allow the [[broker]] to alert the client anyway, and indeed where such notification could be a criminal offence (market abuse, etc). Even where the notification clause carves out where “notification being illegal” this leaves the [[empty set]] of circumstances where the [[broker]] would have to give info about a specific client and the client doesn’t, but was entitled to know about it. | ||
*'''Commercial sensitivity''': Lastly, the legitimate point of a confi is ''to respect the client’s legitimate interest in protecting the commercial value of non-public information''. It is ''not'' to keep silent about behavioural turpitude; indeed a [[broker]]’s regulatory obligations may oblige it to report, without invitation, bad acts it observes, whether the client likes it or not and whether there is a [[confidentiality agreement]] or not. Generally, client information a [[broker]] holds is not legally or professionally [[privilege]]d. Since, by definition, passing information to a regulator should not<ref>Absent a severe dereliction of the regulator’s duty, and in that case there’s not really much the broker can be expected to do about it, is there?</ref> prejudice the commercial value of that information, it is hard to see when client would have a valid reason to seek injunctive relief to prevent disclosure of information to a competent regulator. | *'''Commercial sensitivity''': Lastly, the legitimate point of a confi is ''to respect the client’s legitimate interest in protecting the commercial value of non-public information''. It is ''not'' to keep silent about behavioural turpitude; indeed a [[broker]]’s regulatory obligations may oblige it to report, without invitation, bad acts it observes, whether the client likes it or not and whether there is a [[confidentiality agreement]] or not. Generally, client information a [[broker]] holds is not legally or professionally [[privilege]]d. Since, by definition, passing information to a regulator should not<ref>Absent a severe dereliction of the regulator’s duty, and in that case there’s not really much the broker can be expected to do about it, is there?</ref> prejudice the commercial value of that information, it is hard to see when client would have a valid reason to seek [[injunctive relief]] to prevent disclosure of information to a competent regulator. | ||
And that is borne out by the [[JC]]’s tawdry personal experience (anecdotal though it may be, it does span 22 years and | And that is borne out by the [[JC]]’s tawdry personal experience (anecdotal though it may be, it does span 22 years and three different [[investment bank]]s): the [[JC]] has never ever, ever seen ''anyone'' even ''try'' to get an [[injunction]] to stop disclosure of {{confiprov|confidential information}} to a regulator. | ||
=====Cut-out-and-keep response===== | |||
Try sending your counterpart something like this (put “dear —”, and “kind regards” around it, of course): | |||
{{subtable|{{Confi disclosure to regulators}} }} | |||