Hello and welcome back to the Fides Weekly Update. Here you’ll find a summary of what’s been happening in your industry this week. For a brief round-up of the key developments, scroll down to take a look our regular ‘Movers & Shakers of the Week’ feature.
1. SFO has a shaky end to the year as Tesco prosecution collapses in court
Another blow for the Serious Fraud Office (SFO) as a Crown Court judge throws out the investigator’s case for prosecution against two Tesco executives, only weeks after the SFO was refused a request to reinstate charges against Barclays Bank.
Former Tesco directors Christopher Bush and John Scouler were acquitted for any wrongdoing by the Criminal Court of Appeal on Thursday. Trial judge Sir John Royce concluded that “the prosecution case was so weak it should not be left for a jury’s consideration” as he dismissed the 12 members of the jury and ended the trial.
Sir John argued that there were a number of crucial holes in the prosecution’s case, and most detrimental was the lack of evidence to demonstrate any knowledge on the parts of the executives regarding improper accounting and falsifying of reports.
The case dates back to 2014, after the UK retail giant posted profits that proved to be overstated by £250 million. It wasn’t long before investor concern radiated through the market and Tesco’s accounting scandal led to the SFO pursuing a trial against former UK Tesco head Christopher Bush and former UK commercial food director John Scouler. The case was abandoned with a second trial emerging two months ago.
Adding to the SFO’s losses was the refusal of its application to reinstate charges against Barclays at the end of October. A High Court judge rejected the bid to prosecute Barclays for unlawful financial assistance, which is in relation to a £12 billion capital raising from Qatar during the financial crisis.
Failure to take these cases to trial will no doubt mark a difficult start to Lisa Osofsky’s reign at the investigatory body, who took over from David Green QC as Director of the UK Serious Fraud Office in September this year. With her career including a stint as deputy GC at the FBI, Osofsky will be dead set on not allowing these setbacks to define the organisation’s efforts in 2019, and has a number of investigations on companies waiting to potentially be taken to court, such as Airbus, Rolls-Royce and Patisserie Valerie.
With a couple of high profile losses under its belt, it’s likely the SFO will be strengthening its efforts to avoid another “weak” prosecution case in the future.
2. FCA delivers warning over banks’ City departures due to Brexit
Financial papers this week have been filled with news of major banks preparing to shift operations from the UK to other European destinations. In the wake of Bank of America announcing its shift to Dublin, and RBS potentially moving £13bn worth of business to the Netherlands, the Financial Conduct Authority (FCA) has warned a group of international banks around the implications of such a move.
In a letter written to banks and signed by the FCA’s executive director of supervision Megan Butler, the watchdog makes it clear that any attempts to move non-EU clients outside of the UK, which could unnecessarily expose them to increased costs and risks, may lead to intervention from the FCA.
It continues to say that banks should “make the minimum necessary changes required” and that moving clients outside of the UK should only be confirmed once the FCA has approved it, which will depend on whether the decision makers “have fully considered the impact of their firms’ proposals on every category of client.”
Addressing the Treasury Select Committee, chief exec Andrew Bailey argues that the letter’s contents have no political interests attached, but is rather intended to serve the FCA’s core objectives to protect customers:
“We didn’t do this to say, ‘nobody must leave the UK’… [but] if you are considering moving non-European business, then you have to make those decisions in the interests of the client,” says Bailey.
Earlier this year, a Reuters survey showed that UK-based financial institutions expect approximately 5,800 jobs to be moved outside of the UK. That compares to around 10,000 in the first survey in September 2017.
Movers & Shakers of the week
Nomura’s former EMEA deputy head for financial crime Steve Smith has joined Eversheds Sutherland as a partner in the firm’s corporate crime and investigations team. Steve has previously worked in Barclays’ financial crime team and the FCA’s enforcement division.
Düsseldorf corporate partner Murad Daghles is the third recent departure from Allen & Overy’s German offices. He is set to join White & Case’s partnership in the region.
Squire Patton Boggs’ head of construction and engineering Olivia Bateman has joined Fladgate this week.
M&A partner Derek Meilman has left Hogan Lovells to join King & Spalding in the firm’s burgeoning City office.
Bird & Bird partner Robert Rhoda will be joining Denton’s HK dispute resolution practice alongside associates Connie Wong and James Wong. Associate Grace Lee and senior managing associate Jenny Zhuang will also join next month, with Zhuang joining as counsel.
Mergers & Alliances
This will mark Quinn’s first female partner promotion in London
Diversity & Inclusion
Legal Technology & Innovation
Xmas Bonus Special