How does a fast growing private equity-owned firm, take its risks, manage conflicts of interest so that it can maintain its lightly externally regulated status?

Group Presentation Aims and Example Cases Countrywide Financial and its sub–prime practices (Ferrell, Fraedrich & Ferrell, 2011) AIG and ethical behavior/incentives  (Ferrell, Fraedrich & Ferrell, 2011)
The fraud of the century: Bernie Madoff Banking industry meltdown: The ethical and financial risks  of derivatives (Ferrell, Fraedrich & Ferrell, 2011) Enron: Question accounting leads to collapse (Ferrell, Fraedrich & Ferrell, 2011)
Arthur Andersen: Questionable Accounting Practices (Ferrell, Fraedrich & Ferrell, 2011) (Cordery, 2007 and others)JP Morgan Chase whale trades: A case history of  derivatives risks and abuses (US Senate, 2013, p 96–149)

This presentation will be completed in teams and the findings presented to the class.
Your team will address the following questions over 3–4 minutes, one question per student as found below:

1.Summarise the background and findings – why is this important?

2.Identify the issues raised by the case study – Who are the stakeholders impacted?

3. Reflect on the impact of the regulatory or ethical issue upon the broader financial markets.

Greensill: Where do we start?
Photo credit: Four Corners ,

Greensill: Background and importance

Greensill was a provider of supply chain financing which filled bankruptcy in 2021 Greensill was a private equity owned firm that offered supply chain financing
Most of its funding came from one global bank, via a fund offering sold to
wealth management clients. Some funding came from a small bank in Germany
Most of the trade credit insurance, that suggested these were safe products for
investors, was concentrated with one credit  insurer (Bloomberg, March 2021)

The importance of this case is many, but it raises:
How a lightly regulated UK firm can generate substantial potential losses?

Management of any conflicts of interest seemingly weak internal governance and ties
to powerful political forces .Who will pay? Investors, credit insurers,
depositors, banks? It is a systemic issue?
1. REGULATORY FAILURES?
2. CONFLICTS MANAGEMENT?
3. INTERNAL GOVERNANCE?
4. RISK OF LOSSES – STAKEHOLDERS
IMPORTANCE OF GREENSILL
5. A SYSTEMIC RISK ISSUE?

Greensill: Issues raised and stakeholders
How were the conflicts of interest managed and by whom?

Stakeholders in this complex set–up include (underlined):

How a lightly regulated UK firm or “appointed representatives regime” can amass $10bio of funds from a global bank managed fund sold as low risk but be exposed to potential losses for fund investors, Good clients who relied on its financing, staff and the owners (PE)Depositors of the bank that also provided funding, deposit insurance?

Greensill: Potential regulatory, governance and ethical issues raised

Regulation – Did UK regulatory oversight fail? Does the appointed representative
regime work? Should bank structures or activities be regulated?

SMR regime applied? Group supervision? How were COVID related programs approved?

Regulation – Did regulatory oversight fail for the bank? How were concentrations
of risk monitored by the regulator? What was the bank’s risk appetite? Should
depositors waive their deposit insurance? Is $10bio a systemic risk?

Governance – How did a PE owner manage its own conflicts?
Did the PE owner invest into the bank funds? Did the GAM episode not embed learning lessons?

Governance – How does a fast growing private equity–owned firm, take its risks, manage conflicts of interest so that it can maintain its lightly externally regulated status? Was anyone strong enough to challenge the CEO?

Ethics – Why was a ex UK PM an advisor and board observer for an activity which he may have had limited technical knowledge of? Did he forfeited potentially millions of upside?
Did others open doors to lucrative government contracts?