The City has been in the PR mire for some time. Since the financial crash, institutions and individuals have been scrambling to save face, only to be undermined by a stream of negative press.
This week, that negative press has been provided with the flash crash case of Navinder Singh Sarao. A self-employed day trader, he faces extradition charges to the US, where he is accused of playing a significant role in, momentarily, taking up to $1 trillion off Wall Street. In a 45 minute period, almost 1000 points were knocked from the Dow Jones Industrial Average, the US’s premier exchange. The premise was simple, Sarao added sell orders which could be seen around the world, and caused others to add sell orders, panicking about a potential fall in their market. Following the cancellation of his orders, Sarao would then track the market down, and buy for supposed huge personal profits. This crime carries the potential for 380 years in prison, not something to be sniffed at.
In addition, Deutsche Bank, one of the largest financial institutions in the world, accepted a record libor fine of £1.6 billion for its role in fixing international interest rates during 2005-2010. These two crimes accurately portray the various flaws in City institutions. Firstly, the ability to undermine and subvert the system, and secondly the damage that can be done to its image.
Having been caught on the back foot when the markets fell, the financial regulators have now taken the fight to the institutions, inflicting more stringent fines. However, more needs to be done. Whilst America can be seen setting a hardline with its sentencing, 150 years for Bernie Madoff springs to mind, the UK needs to work harder at finding those who have abused the system criminally guilty.
The banks themselves, seemingly reticent to move on from their glory years, need to be seen doing more in the public eye to clear up their act. Possibly fearful of their pariah status, heads of UK banks have been notable in their absence from British screens in the last seven years. It will take strong character, but to move past the current public perception, banks need to work as never before to root out those who are abusing the system, and prove to the country and the world that this vital part of our economy is worth sustaining.