U.S. SEC Commissioner Stein issues dissent on waivers for 5 banks

By Sarah N. Lynch

WASHINGTON, May 21 (Reuters) - A top U.S. regulator issued a scathing dissent late on Thursday over her agency's decision to grant a series of regulatory waivers to five big banks which pleaded guilty to market manipulation on Wednesday.

Securities and Exchange Commission Democratic member Kara Stein said in a statement that allowing the banks to "continue business as usual, after multiple and serious regulatory and criminal violations, poses risks to investors and the American public that are being ignored."

Her statement comes just one day after the SEC (Shanghai: 603988.SS - news) gave JP Morgan Chase & Co, Citigroup Inc (NYSE: C - news) , UBS AG (NYSEArca: FBGX - news) , Barclays Plc (LSE: BARC.L - news) and the Royal Bank of Scotland (LSE: RBS.L - news) Group Plc a series of waivers to let them continue their usual securities business.

The waivers were needed after UBS pleaded guilty to rigging the London Interbank Offered Rate (Libor) interest rate benchmark and the other four pleaded guilty to manipulating foreign currency rates. Such criminal conduct automatically disqualifies them from certain activities in the securities business.

But all the banks won SEC waivers to let them continue being "well-known seasoned issuers" or WKSIs - a status that lets them raise capital quickly without prior SEC approval. Barclays and UBS also won other waivers letting them continue raising capital through private deals.

Stein cited "compelling reasons" to reject many of the waivers, which had been requested by the banks. She noted that UBS, for instance, has now received its seventh WKSI waiver since 2008.

At least 23 WKSI waivers have been granted to the five banks in the past nine years, she noted.

"Firms and institutions increasingly rely on the Commission's repeated issuance of waivers to remove the consequences of a criminal conviction, consequences that may actually positively contribute to a firm's compliance and conduct going forward."

(Reporting by Sarah N. Lynch; Editing by Richard Chang)