A UK government guide, “Small businesses: what you need to know about cyber security“, was published on 23 April 2013.
The associated BIS press release is here.
3 April 2013
Herbert Smith charged £1.8 million in fees for work on the Salz Review of Barclays’ Business Practices
See page 172 of the Salz Review document.
The 244 page Review only makes one mention of Barclays’s General Counsel (and that is in the context of his membership of a board committee).
The Review’s section on Board governance and the Appendix on “What is Culture and How Can It Go Wrong?” are vaguely interesting. Otherwise, the Review adds little to the recommendations of the Walker Review of Corporate Governance in UK banks.
21 January 2013
ICSA guidance on liability of non-executive directors: care, skill and diligence
In 18 January 2013 ICSA published a guidance note on ”Liability of non-executive directors: care, skill and diligence“. From the accompanying press release:
“The latest ICSA guidance note suggests ways in which NEDs can approach their work which would also allow them to demonstrate to a regulator, or in a court of law, that they had executed all necessary steps to reduce their liability exposure.
read more »
11 January 2013
Bribery: Rolls-Royce appoints ex-Herbert Smith litigator to review its compliance procedures
Following bribery allegations, Rolls-Royce has appointed Lord Gold to review its compliance procedures. From the RNS:
“This follows the previous announcement by Rolls-Royce that it has provided information to the Serious Fraud Office (SFO) relating to concerns about bribery and corruption involving intermediaries in overseas markets.”
Lord Woolf performed a similar function for BAE Systems in 2007-8.
11 December 2012
ICAEW technical release on reporting to third parties
Has been updated. Contains examples of engagement letters, liability caps and disclaimer notices.
“This guidance, ICAEW Technical Release TECH 10/12AAF (Audit 1/01 updated), is issued by the Audit and Assurance Faculty of ICAEW in November 2012 to assist professional accountants when asked to provide reports that have been requested by third parties. ICAEW Technical Release TECH 10/12AAF updates ICAEW Technical Release Audit 1/01, Reporting to third parties, originally issued in 2001.”
10 December 2012
Facilitation payments: new SFO letter stressing their absolute illegality under Bribery Act 2010
…irrespective of size or frequency. (Letter dated 6 December 2012.)
7 December 2012
Rolls-Royce reports bribery and corruption allegations to the SFO
Rolls-Royce announcement, 6 December 2012:
Rolls-Royce, the global power systems company, has passed information to the Serious Fraud Office (SFO) relating to concerns about bribery and corruption
involving intermediaries in overseas markets.This follows a request for information from the SFO about allegations of
malpractice in Indonesia and China. Investigations by Rolls-Royce have
identified matters of concern in these, and in other overseas markets.The consequence of these disclosures will be decided by the regulatory
authorities. It is too early to predict the outcomes, but these could include
the prosecution of individuals and of the company. We will cooperate fully.Rolls-Royce has significantly strengthened its compliance procedures in recent
years, including a new Global Ethics Code and a new Intermediaries Policy. It
has also expanded the Compliance function. As a further measure, Rolls-Royce
will appoint an independent senior figure who will lead a review of current
procedures and report to the Ethics Committee of the Board.
29 November 2012
HM Crown Prosecution Service Inspectorate report into the Serious Fraud Office
HM Crown Prosecution Service Inspectorate published its report on the SFO on 20 November 2012. The report can be read here; the accompanying press release is here. From the press release:
“The inspection found significant process failures and other weaknesses, which the agency needs to address to improve performance. The Inspectorate also identifies strengths, for example in analysis and presentation of evidence.
The report makes eight recommendations, all of which the new SFO Director, David Green QC, has accepted. Changes instigated in the past few months have begun to address the issues of concern.”
These posts capture some of the reasons why the SFO was inspected.
15 November 2012
“The former Director wholly failed”
Paragraphs 9 to 13 of this Judgment on Costs (via FT Alphaville) pull no punches as to the High Court’s view of the conduct of the former director of the Serious Fraud Office in the Tchenguiz case.
For more on the SFO’s humiliation, see here.
29 October 2012
SFO publishes revised Bribery Act policies on facilitation payments, hospitality and corporate self-reporting
17 October 2012
Bribery Act: new “useful links” page from the Serious Fraud Office
The Serious Fraud Office has added a new page of “useful links” to its pages on the Bribery Act 2010.
16 October 2012
SFO’s Tchenguiz humiliation complete
Yesterday the Serious Fraud Office dropped its investigation in the collapse of Kaupthing Bank and abandoned its case against Robert Tchenguiz. This completes this disastrous episode for the SFO – or maybe not, as both Tchenguiz brothers are expected to seek damages from the agency.
See also: SFO drops disastrous investigation into Vincent Tchenguiz; never got into Annabel’s
Serious Fraud Office apologises to Tchenguiz
SFO to be investigated as it lectures business leaders on “tone from the top”
1 October 2012
Professional advisers’ duty of care and engagement letters: Wragges summary of Arrowhead v KPMG LLP
A useful summary of Arrowhead Capital Finance Ltd (In Liquidation) v KPMG LLP by Wragges here:
read more »
28 September 2012
We are not the “serious champagne office”
Law firm McGuire Woods reports (unsourced) that the Director of the SFO has allayed some concerns about the impact of the Bribery Act 2010 on corporate hospitality, quoting Mr Green as saying:
“We are not interested in that sort of case. We are interested in hearing that a large company has mysteriously come second in bidding for a big contract. The sort of bribery we would be investigating would not be tickets to Wimbledon or bottles of champagne. We are not the “serious champagne office”.”
McGuire Woods article here.
Follow us on Twitter @CoFinLaw
14 September 2012
“I take responsibility for my actions and the s**t storm that will now ensue.”
UBS’s Kweku Adoboli’s e-mail on the day his rogue trades were uncovered.
14 September 2012
Cummings goings: former head of HBOS Corporate division fined and banned by the FSA for “culture of optimism”
leOn 12 September 2012 the Financial Services Authority announced that is fining Peter Cummings – former head of the HBOS Corporate division - £500,000 and banning him from holding any senior position in a UK bank, building society, investment or insurance firm. As the FSA said, “this is the highest fine imposed by the FSA on a senior executive for management failings”.
The FSA press release is here and the Final Notice for Mr Cummings is here. Mr Cummings’ very punchy rejoinder is here, his objections focusing on (i) the FSA’s apparent conflict of interest in being both the regulator responsible for HBOS during its downfall and the body standing judgement over Mr Cummings, and (ii) the seeming unfairness of Mr Cummings having been the only HBOS executive punished by the FSA in connection with its collapse.
The action against Mr Cummings follows the regulator’s public censure of Bank of Scotland in March 2012 when, as we discussed here, it found that between 2006 and 2008 HBOS’s Corporate division lost control, didn’t know what it was doing and continued with a flawed strategy as competitors exited and markets worsened.
The completion of enforcement action against Mr Cummings means that the FSA will now commence work on its report into the causes of the failure of HBOS in 2008, the purpose of which report will be to:
- “explain why HBOS failed and cover the FSA’s supervision of HBOS and explain the focus of the enforcement actions; and
- inform a wider internal and public understanding of the causes of failure during the crisis (to the extent not already covered by the RBS report)”
From the FSA’s press release on its banning of Mr Cummings:
read more »
10 September 2012
Retail opposition to high-frequency trading
From the New York Times, a general account of HFT’s impact on retail brokers:
read more »
5 September 2012
BIS says cyber security is a matter for the Board and part of good corporate governance
The Government today launched new guidance for senior business leaders on tackling “the growing cyber threats to their companies”. The BIS press release is here. Excerpt:
read more »
29 August 2012
Gloom-ridden lawyers
Squire Sanders have produced a fantastically downbeat note on everything that could go wrong. It’s here, if you’re in the mood.
20 August 2012
Tips for surviving social media
From Kennedy’s, short and sensible advice on how employees and employers can dealing with “changes brought on by the rise of social media”.
Follow us on Twitter @CoFinLaw
14 August 2012
Special purpose entities, and where the boundaries of a corporate entity lie
“A Transactional Genealogy of Scandal: from Michael Milken to Enron to Goldman Sachs”* (downloadable here) looks at how the “integration of SPEs into regulatory systems requires a ground-up rethinking of traditional legal models of the firm”.
From the abstract:
read more »
11 July 2012
FSA’s letter on Barclays’ “tendency continually to seek advantage from complex structures or favourable regulatory interpretations”
Via the Treasury Select Committtee, here is the Chairman of the Financial Services Authority’s 10 April 2012 letter to the Chairman of Barclays, in which the FSA remarked on its:
“…concerns about the cumulative impression created by a pattern of behaviour over the last few years, in which Barclays often seems to be seeking advantage through the use of complex structures, or through arguing for regulatory approaches which are at the aggressive end of intepretation of the relevant rules and regulations”.
Barclays’ response – which reads like that a boy who, whilst clever, is missing the wider point that his headmaster is making – is here.
See also: The implicit subsidy of UK banks by the government – Bank of England paper, May 2012
2 July 2012
LIBOR scandal: Serious Fraud Office looking at criminal charges, review into adequacy of sanctions for financial misconduct, Parliamentary inquiry into banking standards
In his statement this afternoon on LIBOR, the Chancellor of the Exchequer announced a plethora of inquiries and reviews:
read more »
2 July 2012
“I love Barclays, and I am proud of all of you”: Bob Diamond letter to staff
Bob Diamond has written to all Barclays staff about the LIBOR scandal and the resignation of the bank’s chairman. The most interesting part of the letter concerns the failures of Barclays risk management:
“The events revealed last week arose in large part because we did not have appropriate controls in place. Frankly, we misjudged the risk associated with the underlying activity. That must never happen again. Once we better understood the risks, we put in place the right controls and systems.”
Mr Diamond doesn’t address the question that is likely to preoccupy the Treasury Select Committee on Wednesday: to what extent did he know about the incorrect LIBOR submissions at the time they were made?
Follow us on Twitter @CoFinLaw
2 July 2012
“A devastating blow to Barclays reputation”: chairman resigns, bank launches independent review of its business practices
The chairman of Barclays, Marcus Agius, has resigned following the LIBOR scandal. Mr Agius said in the bank’s statement:
“…last week’s events – evidencing as they do unacceptable standards of behaviour within the bank – have dealt a devastating blow to Barclays reputation. As Chairman, I am the ultimate guardian of the bank’s reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside”.
The bank has started an independent review of its business practices:
read more »
28 June 2012
LIBOR fixing scandal: Bob Diamond letter to Treasury Select Committee leaves key question unanswered
Here is the letter sent by the Barclays Chief Executive to the Chairman of the Treasury Select Committee tonight. Excerpts are copied below .
The letter says that the attempted manipulation was done for two reasons:
- To benefit trading positions.
- More interestingly, in relation to the LIBOR setting process during the credit crisis. That was to attempt to reduce the market perception that Barclays was suffering higher funding costs than other banks.
The key question that the Barclays letter raises, but does not answer, is who took the “decision to lower submissions” in relation to that second reason. It seems ill-advised that Barclays has released a letter that so obviously poses this question but leaves it unresolved. The bank will be under pressure to provide an answer.
read more »
28 June 2012
Chancellor’s statement on LIBOR fixing scandal: market abuse regime to be reviewed, Government to consult on criminal sanctions for bank directors
The Chancellor of the Exchequer made a statement to Parliament today on the FSA’s investigation into Barclays’ attempted manipulation of the LIBOR and EURIBOR rates.
On the general culture that the FSA’s report reveals, the Chancellor said:
read more »
18 June 2012
SFO drops disastrous investigation into Vincent Tchenguiz; never got into Annabel’s
The Serious Fraud Office arrested property entrepreneur Mr Tchenguiz and his brother Robert in March 2011, in a publicity-seeking raid on the morning of the Cannes MIPIM property conference.
After that the investigation descended into farce, culminating with the SFO apologising to Mr Tchenguiz, the Attorney General launching an investigation into the SFO’s operations and a judge criticising the SFO’s “sheer incompetence“.
Today the SFO, which apparently seriously considered placing agents in Annabel’s nightclub as part of its activities, informed Mr Tchenguiz that it is dropping its investigation. (Robert Tchenguiz remains under investigation.) Here’s today’s punchy statement from Vincent’s Consensus Business Group (via FT Alphaville).
UPDATE 31 July 2012: The High Court has declared that the search warrants issued to the Serious Fraud Office were unlawful as they were obtained by misrepresentation and non‐disclosure to the judge – summary of judgments here and SFO press release here.
Follow us on Twitter @CoFinLaw
15 June 2012
Retail forex platform to punters: for your own good, we’re suspending service during Greek elections
With the Chancellor of the Exchequer and the Governor of the Bank of England setting out their policy responses (last night’s Mansion House speeches here and here) to the continuing tightness of credit in the UK and anticipated liquidity problems following the Greek elections, and the ECB also hinting that it will make additional liquidity available to Eurozone banks, the retail forex trading OANDA is suspending its service on Sunday:
“The decision to halt trading is very much tied to the uncertainty in Europe and in particular, the Greek election. Given these events, there is the potential for extreme exchange rate volatility at a time when global currency markets are closed. OANDA’s concern is that exchange rates could undergo significant fluctuations as the exit polls are made public. If these fluctuations are wide enough, accounts that under normal conditions would be considered well-capitalized, could become subject to a margin call.
By halting trading and holding the closing prices steady during this period, we aim to shelter traders from the potential for price spikes.”
See also: Brokerage exits Greek stock market, credit insurer reviews [now pulls] cover for exports to Greece
A Eurozone exit: forex traders and retailers prepare
A Eurozone exit: Legal implications for companies and businesses
14 June 2012
Why banks are inherently unstable
It’s hardly the whole story, but here is a clearly-written explanation (from the final report of the Sharman Inquiry) of why one of the basic purposes of banks – maturity transformation – makes them inherently unstable:
read more »
14 June 2012
Going Concern and Liquidity Risks: Final report of the Sharman Inquiry
The Sharman Inquiry on “Going Concern and Liquidity Risk: Lessons for companies and auditors” published its final report and recommendations on 13 June 2012. The final report is here and the Financial Reporting Council’s accompanying press release is here.
The Inquiry was established by the FRC in March 2011, as we reported here, to “identify lessons for companies and auditors addressing going concern and liquidity risk” arising from the financial crisis. Amongst the Inquiry’s terms of reference were:
• “How companies ensure the adequacy, timeliness and reliability of the internal information used to monitor going concern and liquidity risk; and
• Whether the going concern and liquidity risk disclosures required by IFRS, the UK Corporate Governance Code and the Listing Rules provide timely and relevant information for all stakeholders.”
The Inquiry issued its interim report in November 201 (see our summary here).
Purpose of a company’s going concern assessment
read more »
30 May 2012
Weavering: civil court finds that hedge fund manager committed fraud
Back in September 2011 we noticed the curious decision of the Serious Fraud Office to drop its investigation into Weavering Capital, the investment advisor to the failed Weavering Macro Income Fund (a Cayman Islands hedge fund). The SFO’s dropping of its investigation was thrown into relief when the Cayman Grand Court found two of the Fund’s directors, Stefan Peterson and Hans Ekstrom, guilty of wilful negligence and awarded damages against them of $111 million in a case brought by the Fund’s liquidators.
Today the High Court in London found Magnus Peterson, the founder of the Fund (and brother of Stefan, stepson of Hans) to have committed fraud and breached his duty of care and so liable for deceit in a civil case brought by the Fund’s liquidators.
read more »
28 May 2012
Serious Fraud Office comes over all bashful following Tchenguiz case
According to research by the law firm Pinsent Masons, the Serious Fraud Office has not carried out a single dawn raid since its flawed search of the offices of the Tchenguiz brothers in early 2011.
That compares to a much greater level of activity in the preceding years, says Pinsents:
read more »
28 May 2012
Brokerage exits Greek stock market, credit insurer reviews [now pulls] cover for exports to Greece
The unravelling of the Greek economy’s infrastructure continues, with the brokerage firm Newedge informing clients that it will only process sell orders on Greek shares and will not extend margin loans on positions in Greek securities (Financial Times), and (more ominously) the large credit insurer Euler Hermes stating that it is reviewing coverage for exports to Greece (Bloomberg).
UPDATE 30 May 2012: Euler Hermes pulls cover on exporters to Greece
See also: A Eurozone exit: forex traders and retailers prepare
How would Greece actually carry out a Eurozone exit?
A Eurozone exit: Legal implications for companies and businesses
25 May 2012
Former head of digital fraud at Lloyds Banking Group is… charged with fraud
From the Crown Prosecution Service news blog:
Andrew Penhale, Deputy Head of the CPS Central Fraud Group said:
read more »
15 May 2012
Failures of common sense cause three board directors to leave US companies
The CFO of Francesca’s Holding Corp. has been removed after using Facebook and Twitter to disclose potentially price sensitive information. Apparently he thought he was being amusing.
The CEO of Best Buy left just before it emerged that the company had been investigating his “intense” relationship with a junior employee. Now the cover-up has caused the Chairman to go as well. (The Daily Mail gets to the heart of the matter in its inimitable style.)
And the CEO of Yahoo left after a hedge fund pointed out that his CV claimed he had a degree he hadn’t got.
15 May 2012
Impact of the Eurozone crisis on UK business: ICAEW survey
The ICAEW has published the results of a survey of 508 ICAEW members working in commercial businesses on “the impact of the Eurozone crisis on UK business”. The survey is here and an accompanying ICAEW blog post here. Amongst the findings:
read more »
