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The risks involved in securities settlement and custodial services

Posted on by aldopuch

Court verdict on Wells Fargo’s securities lending programme

A federal court jury in Minnesota has rejected an $8.2m claim by Blue Cross Blue Shield of Minnesota and other institutional investors that Wells Fargo & Co misrepresented a securities lending programme as safe.  Under the program, Wells Fargo held its clients’ securities in custodial accounts and made temporary loans of the instruments to brokers who then used the securities to support trading activities.  The Bank’s defence was that losses were due to the financial crisis.

Following the verdict the bank told Bloomberg that “Wells Fargo sought to achieve the best results for all participants in the securities lending program during extremely difficult economic conditions.” The case is only one of five which have been brought against Wells Fargo & Co with three set for a hearing in 2014.  However the bank is not the only one to have found itself before the courts as the fall-out from the financial crisis of the past few years continues to rumble on.

The place of securities settlement within banking operations

International securities settlement and custodial services are an important element of a bank’s operations and the cases before the courts do highlight the risks involved.  That is why it is essential for all those involved in risk management, compliance, operations and management as well as those more directly involved in day to day settlements and custodial operations to gain an appreciation of the wider implications.

If you want to learn more about the latest trends in International Securities Settlements and Custodial Services you can attend a Eureka Financial course which provides delegates with practical knowledge about the key concepts, systems, processes and procedures in international securities settlement and custodial services as well as operational risks involved.

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Eureka Financial offers over 100 public and in-house training courses in banking and finance, corporate finance and M&A, risk management, operations, investments, wealth management, soft skills and management. For more details visit: www.eurekafinancial.com

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