Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
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1). Citigroup announces investment banking overhaul to employees
It has been reported by several news outlets today that Citigroup released an internal memo stating its intentions to merge the bank’s investment banking arm with its capital markets origination (CMO) unit.
The new setup will bring Citi in line with its rivals, most of whom have already integrated their investment banking and capital markets functions.
The new unit will be titled Banking, Capital Markets and Advisory, headed up by both Tyler Dickinson, who currently leads the CMO function from New York, and London-based Manolo Falco, EMEA head of Corporate and Investment Banking.
President of Citi and head of the Institutional Clients Group Jamie Forese spoke with the Financial Times, and says the new structure should create “a more comprehensive coverage model” by “aligning our capital raising and advisory products more seamlessly”.
The restructuring marks a fresh start for Citi, having declared the completion of Citi’s post-crisis efforts in streamlining its services in July last year. CEO Michael Corbat proclaimed the Wall Street bank had “crossed an inflection point” and was on the path to growth. It’s anticipated the new unit will increase Citi’s profitability and help reach its goal of becoming a top three operator in global investment banking.
Earlier this week, Citi announced internally the departures of three individuals in its senior ranks: chief financial officer John Gerspach, EMEA chief exec Jim Cowles, and Bill Mills, the North America chief.
2). SFO Overturned in landmark legal ruling case
In a highly anticipated judgment over legal professional privilege, the Court of Appeal has ruled against the Serious Fraud Office (SFO) and determined that documents shared between the Eurasian Natural Resources Corporation (ENRC) and former adviser Dechert should be protected.
This will have significant consequences for dispute lawyers across the UK, as it reassures both small and large businesses alike that they can obtain legal advice on sensitive matters without concerns over confidentiality.
The Court of Appeal judgement overturns a previous decision made in favour of the SFO in 2017, in which the regulator argued that the ENRC’s claims to privilege over documents containing notes on interviews with current and former employees taken as part of an internal corruption investigation were unfounded.
Hogan Lovells commercial litigation partner Michael Roberts, who represented ENRC, said of the decision: “This historic ruling by the Court of Appeal is significant not just for ENRC but for any company faced with undertaking an internal investigation in response to a whistleblower or other allegation of wrongdoing.
“It is critical that companies are not penalised for acting responsibly, and are able to instruct lawyers to conduct investigations without fear that the authorities will later be able to demand all of the lawyers’ work product. Following this ruling, it will remain for the company to decide whether, and to what extent, it is prepared to waive privilege.”
The controversy started in 2010, after whistleblower allegations of bribery and financial malpractice emerged at FTSE 100-listed ENRC, and its relationship with subsidiaries in Kazakhstan and Africa. The mining company sought counsel from US firm Dechert, which in 2011 took a lead role on the internal investigation, to be replaced in March 2013 by Signature after confidential information was leaked to the press. Hogan Lovells took up the mandate in March 2017.
Eversheds Sutherland represented the SFO with a team led by partner Peter Jones, who instructed Red Lion Chambers’ Jonathan Fisher QC and Blackstone Chambers’ Eesvan Krishnan and James Segan.
The original decision was significant for myriad reasons. Principally, that commentators from around the market thought that it could deter companies self-reporting when faced with these charges in the future.
However, while the Court of Appeal’s ruling reinforced privilege in relation to corporate investigations, it left open a broader issue of who, within a large organisation, is authorised to deal confidentially with a law firm, also known as legal advice privilege.
3). Movers & Shakers
Appointments
White & Case brings in GC to kickstart new corporate venture
Moves
Former Sidley Austin London head rejoins Baker McKenzie
Baker McKenzie has continued its City hiring spree with the addition of Sidley Austin London global finance co-head Matthew Dening, who returns to the international firm after 14 years
Russia sanctions climate forces high-billing Moscow team to leave Akin Gump
Akin Gump’s Russian operations are taking a major hit, with Moscow rainmaker Ilya Rybalkin leaving to form an independent 13-lawyer outfit in the city
White & Case continues City recruitment push with RBS head of investigations and litigation
White & Case has hired Royal Bank of Scotland’s (RBS) head of litigation and investigations Laura Durrant, in the latest boost to the US firm’s London office
Watson Farley rebuilds aviation finance after team with Bird & Bird partner hire
Watson Farley & Williams has taken a step to rebuild its aviation finance practice after several heavyweight departures earlier this year with the hire of Bird & Bird partner Jim Bell to its City base
From PSL to partner: Kirkland breaks new ground with Weil hire
In a rare move for a US firm in London, Kirkland & Ellis has hired a professional support lawyer Kate Stephenson as a partner to drive growth in its increasingly busy restructuring practice
Mergers & Alliances
DLA Piper adds 60-lawyer team in Denmark with takeover of local firm
Office Openings & Closings
BCLP gets green light for Hong Kong and Singapore combination after five-month delay
Inclusion & Diversity
A&O release 2018 gender pay gap figures
Six City firms unite in project to get career-break women back on partner track
Technology & Innovation
Legal artificial intelligence firm Kira raises $50m in first external funding round
China’s Zhong Lun gets behind new AI platform to boost trade
Clifford Chance invests in new tech platform to support deal teams