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Contracting Out Regulatory Investigations - A Costly Exercise, Contributed by Joan E. McKown, Jones Day

Wednesday, November 2, 2011
Last month the financial community was shocked to learn of the allegedly fraudulent and unauthorized trading by UBS trader Kweku Adoboli. In a somewhat unusual turn, as part of the regulatory response, the United Kingdom’s Financial Services Authority (FSA) and Switzerland's Financial Market Supervisory Authority (FINMA) have required UBS to pay for KPMG to conduct an investigation on behalf of the regulators. This is on top of UBS's own separate internal investigation. The purpose of the KPMG review is to determine not only what went wrong, but to focus on UBS's role in the wrongdoing. Is contracting out investigative work a good thing for a regulator? In this time of tightened government resources in the United States should U.S. regulators consider such an approach? My answer is a definite no

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