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Risk, Regulation and the BCCI Litigation

Joanna Gray
Solicitor and Reader in Financial Regulation, Newcastle Law School, University of Newcastle upon Tyne

Date: 14 March 2006
Time: 1:00pm - 2:30pm
Venue: CARR Seminar Room, H615

2006 saw the final abandonment of the UK's most expensive single set of civil proceedings to date, namely those proceedings brought by the liquidators of the Bank of Credit and Commerce International against the Bank of England for alleged misfeasance in public office in relation to the discharge of the Bank's supervisory responsibilities in relation to BCCI. Had these proceedings not been abandoned, the resulting judgment would have provided valuable insight into how traditional legal fora and actors in the form of Courts and the judiciary identify and characterise different types of risk that are integral to a banking regulator's task, namely systemic risk (the risk of bank runs and collapse in market confidence) and the prudential risk posed to any individual financial institution and ergo its depositors. However the series of court decisions on the very many preliminary points raised and keenly contested by both sides in the BCCI litigation spans fourteen years and has involved careful appellate level legal attention and argument. It thus provides a rich research site for those interested in the relationship between law, regulation and risk. This paper reviews that litigation as well as more recent instances of attempts to use traditional tools of legal redress to repair politically iconic losses affecting investors and formulates some quite specific and focused questions (but not yet answers) about law, risk and risk-based financial regulation.

Solicitor and Reader in Financial Regulation, University of Newcastle upon Tyne - legal editor of Journal of Financial Regulation and Compliance, Joanna Gray has had long standing teaching and research interests in financial services regulation as well as practical and consultancy experience in the industry.  She is a former Member Law Society Company Law Committee's Financial Services Working Party. Author (with Jenny Hamilton) of "Implementing financial regulation: theory and practice" (John Wiley & Sons Ltd: 2006).