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BNP Paribas Accused of “Inappropriate” Behavior

Global Glimpses | December 1, 2008

A Japanese subsidiary of French bank BNP Paribas has serious problems with its standards of internal control and compliance, according to an independent report investigating a controversial deal.

The bank commissioned the report from an outside committee after a fundraising deal it underwrote caused uproar. The report said the bank’s behavior constituted a breach of trust and was “an extremely inappropriate act, which treated the markets and general investors with disrespect.”

BNP Paribas privately placed a Y30bn ($307m) convertible bond issued by a property development company called Urban, just a month before it collapsed with Y2.3bn in debts. It then emerged that Urban had entered a swaps agreement with the bank that meant it immediately gave all the money it received back to BNP Paribas, which used it to buy Urban shares, giving 90 percent of the proceeds to Urban and keeping 10 percent for itself....

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