Promontory Financial Group


Promontory Financial Group, a wholly owned subsidiary of IBM, is a global consulting firm that advises clients on a variety of financial services matters, including regulatory issues, compliance, risk management, liquidity, restructuring, acquisitions, due diligence, internal investigations and cyber security.

Organization

The company was founded in 2001 by Eugene Ludwig, who served as Comptroller of the Currency under President Bill Clinton, and Alfred H. Moses, a partner in the law firm Covington & Burling LLP. Promontory is based in Washington, D.C. and has 18 additional offices and affiliates worldwide, in Atlanta, Beijing, Brussels, Denver, Dubai, Dublin, Hong Kong, Istanbul, London, Madrid, Milan, New York City, Paris, San Francisco, Singapore, Sydney, Tokyo, and Toronto.
IBM announced its planned acquisition of Promontory in September 2016 and completed the transaction in November 2016.
Promontory Financial is affiliated with several similarly named companies:
Approximately 170 of the consultants working for Promontory were former employees of authorities in financial supervision. The news media has sometimes referred to Promontory as a "shadow regulator" for Wall Street.
Former chairman of the United Kingdom Financial Services Authority Sir Callum McCarthy is non-director chairman of Promontory Financial Group. Former managing director of the United Kingdom Financial Services Authority Michael Foot is global vice chairman. The branch for Europe in Brussels is currently represented by Raffaele Cosimo who worked before for the Banca Nazionale del Lavoro in Rome. Elizabeth McCaul is partner-in-charge of the firm's New York office.
Former executives include the late former Italian Minister of Economy and Finances Tommaso Padoa-Schioppa, who was chairman of Promontory Financial Group Europe; and previous Assistant Secretary for Financial Institutions, U.S. Treasury David Nason and Federal Reserve Governor Sarah Bloom Raskin, who were managing directors. The ex-chairman of the U.S. Securities and Exchange Commission Mary Schapiro joined Promontory in April 2013 as managing director and chairman of its governance and markets practice, and later became vice chairman of the firm's advisory board.

Engagements

After uncovering foreign exchange losses in its U.S. banking subsidiary, Allfirst Financial Inc., Allied Irish Bank in 2002 engaged Promontory to conduct an internal investigation. Promontory issued the "Ludwig Report", on March 14, 2002. The report detailed how the trader John Rusnak hid losses of $691 million over five years. The report concluded that Rusnak, who was fired for his role in the trading losses, received no active help from within or outside the bank. Promontory found that the internal control mechanisms and audits had been insufficient.
Promontory advised further the government of the United States and from other countries like Cameroon and Iceland.
Promontory was hired to carry out by order of the Holy See a comprehensive investigation of all customer contacts of the Institute for the Works of Religion, often also called the Vatican bank, on money laundering guided by Elizabeth McCaul and Raffaele Cosimo.
In the aftermath of the subprime mortgage crisis, Promontory was one of several consulting firms selected by federal banking regulators to conduct reviews of loan foreclosures initiated by 16 mortgage servicing companies. Promontory reviewed the foreclosure activities of Bank of America, PNC Financial Services and Wells Fargo, encompassing more than 250,000 loan contracts. Promontory was paid $927 million, which led to strong criticism and doubt about the independence of the examination. A hearing was arranged by the U.S. Senate Banking Committee to assess whether regulators had handed off too much oversight authority to private consulting firms such as Promontory.

New York State Enforcement Action

In August 2015, Promontory entered into an agreement with the New York Department of Financial Services to resolve the state's allegations that it had watered down compliance reports for a UK banking client, Standard Chartered Bank. Promontory agreed to pay a $15 million penalty and abstain for six months from accepting new consulting engagements in New York.