The Evil Diaries: Plus 500 and HBOS

Not entirely surprisingly, the Plus 500 (PLUS) bid from Playtech has broken down since the FCA was not prepared to give PLUS clearance. Good old FCA (I never thought I’d write that).

But the share price is barely changed down at 355p. Take PLUS’s declaration this morning that “Regulatory compliance capability has been strengthened.” One can read this in all sorts of ways and I am sure that the silliness (because of the vagueness) of the remark has been deliberately cooked up to deflect sensible assessment. However, the fact is that PLUS operated a basically fraudulent business and the FCA was not prepared to tolerate that as far as the British end goes. The question then is: can the business continue to operate successfully in share price terms notwithstanding its basically fraudulent approach? Perhaps.

But the general rule is that a fraud is a fraud and should be steered well clear of. I’m staying short.

*****

Over the weekend, BBC Radio 4 had Paul Moore, formerly of KPMG, to comment on KPMG’s performance as auditor of HBOS. Apparently, HBOS provided only £0.5bn against commercial loans in mid 2008 when HBOS issued a rights issue document but improved on that performance when providing £3.5bn in the December 2008 accounts. This figure was then increased to £7bn by the end of 2009.

Mr Moore took that to be proof that KPMG were bendable through the offer of money for fees or the threat of its withdrawal. KPMG have treated this view as risible. I am sure they are right. The fact is that although punters were well aware that the commercial climate was deteriorating very rapidly nobody knew how quickly or how far the deterioration would proceed. Mr Moore is merely talking with the benefit of hindsight.

Anyway, the true villain of the piece is Gordon Brown. It was he, as the feckless obsessive that he is, who wilfully ignored the interest rate climate that he himself had set about to develop and which had to blow up. It follows that all this Johnny-come-lately criticism of HBOS directors (c. 600 pages) is largely meaningless tosh. It’s really just cooked up to allow Alex Brummer’s Daily Mail readers an opportunity to hyperventilate. ‘Nuff said.