Hello and welcome back to the Fides Weekly Update. Check in here to find out what’s been happening in your industry this week. Scroll down to read our regular feature Movers & Shakers of the week.
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This week:
1). FCA dishes out record-breaking fine for decade-long compliance failure
Swiss bank UBS has been hit with the largest fine related to transaction reporting failures imposed by the UK’s Financial Conduct Authority (FCA).
For breaches spanning from November 2007 to May 2017, the UK watchdog has fined UBS £27.6 million. These breaches include the misreporting of information in relation to 87 million transactions, as well as wrongly reporting a further 50 million transactions over the 10 year period.
In breach of legacy MiFID I requirements, the Swiss bank had not put in place adequate systems and controls to report transactions. The FCA’s executive director of enforcement Mark Steward stresses the importance of these tools: “If firms cannot report their transactions accurately, fundamental risks arise, including the risk that market abuse may be hidden.”
Errors were made on the reporting of transactions such as equity derivatives, trades for portfolio managers and prop traders, and credit default swaps.
Thankfully for UBS, their cooperation with the investigation granted the bank a 30 per cent discount on the penalty, which could have ultimately amounted to almost £40 million.
A number of big banks have previously been fined for transaction reporting, although this penalty is by far the largest levied by the FCA for this form of misconduct. Prior to this, the largest and most recent transaction reporting penalty was Merrill Lynch’s £13.2 million fine in April 2015. This was on account of inaccurately reporting 25 million transactions and its failure to entirely report 121,000 transactions.
This fine is the latest in a spate of bad press for UBS. This week the bank posted the weakest revenues in recent history from its investment banking unit. Compared to Q1 last year, figures were down by roughly a third, whilst the bank’s core wealth management business saw revenues fall by 9 per cent, the FT reports.
Furthermore, female bankers at UBS have been making statements on the bank’s poor management of those returning from maternity leave, specifically the unfair cuts made to their bonus packages, sustained even after a number of years of returning to employment.
2). SRA Finalises plan for foreign solicitor qualification in event of a no deal Brexit
The Solicitor’s Regulation Authority (SRA), the UK’s legal regulator, confirmed changing the rules regarding how non-UK solicitors will qualify to practice in England and Wales ahead of a no-deal Brexit.
Under current legislation, EU lawyers are able to apply for exemptions on a topic by topic basis from the Qualified Lawyers Transfer Scheme (QLTS), which all foreign-qualified lawyers must sit to qualify in England and Wales.
This affords them the same rights as individuals in England and Wales who have completed their LPC, and qualified Barristers looking to transition their practice, although currently no such exemptions are offered to lawyers from beyond the EU.
The QLTS is split into two parts: a 5 hour 30 minute multiple choice test (MCT) designed to assess candidate’s knowledge of the law and how it is applied in England and Wales, and an Objective Structured Clinical Examination (OSCE) to test candidates transactional and dispute resolution skills, client relationship skills and professional values, behaviours, attitudes and ethics.
However, in the event of a ‘no-deal’ Brexit, which remains the default legal position unless a withdrawal agreement is secured, this system would have to change as under World Trade Organisation (WTO) rules – which the SRA would now need to adhere to – the regulator cannot offer preferential treatment to some nationalities over others.
The solution implemented will allow all foreign lawyers to apply for exemptions of the QLTS, but these would only be offered on the basis that they cover the entirety of either or both parts of the test (the MCT and/or OSCE). Whether exemptions are granted will continue to depend upon a case-by-case review of that lawyer’s qualifications and experience.
Whatever the outcome of the Brexit negotiations, arrangements for solicitors from Scotland and Northern Ireland will continue unchanged, and EU-based lawyers wishing to apply under the current exemptions regime can still do so providing their application is received before the date any no deal Brexit becomes effective.
3). Movers & Shakers
Panel Watch
Amazon demands firms show “added value” in European review
Appointments
Dechert Ushers In New All-Male City Leadership Line-Up
Locke Lord appoints new London Managing Partner
Moves
Linklaters Dispatches Top Partner to U.K. Financial Watchdog To Bolster Expertise
Linklaters sends top disputes partner Gavin Lewis on six month secondment to Financial Conduct Authority (FCA).
DWF Hits Dentons For First Post-IPO Partner Hire
DWF has made the first hire post-IPO with the recruitment of Dentons real estate finance partner Brendan Slack.
Dechert hires Akin Gump funds partner in London
Akin Gump investment funds partner Thiha Tun has joined Dechert’s London office
Pinsent Masons to Launch Flexi-Lawyer Service Vario in Hong Kong With Former Axiom Asia Head
Kirsty Dougan joins Vario as Asia managing director based in Hong Kong.
Bird & Bird makes Big Four hire in Hamburg
Hartmut Horner joins Bird & Bird as a partner from Deloitte’s Swiss business, where he was general counsel in the firm’s consulting group
Morrison & Foerster Adds Investigations and Corporate Governance Partners in Germany
Roland Steinmeyer and Patrick Späth join from WilmerHale in Berlin
Mergers & Alliances
Addleshaws and U.S. Firm Held Merger Talks Last Year
Big Four’s Deloitte to Expand Its Hong Kong Law Firm
Office Openings & Closings
Milbank Grows London Footprint By 30 Percent With New Office
Partner Promotions
Slaughters Slashes Partner Promotions Round Making Up One Lawyer
Financials
Kirkland poised to keep top spot as highest-grossing law firm as PEP hits $5m and revenue jumps 18%
Weil Gotshal London Revenue Jumps 14% As Firm Hits New Highs
Profits Per Partner Hit $5 Million at Paul Weiss
Diversity & Inclusion
Baker McKenzie Sets Target for London BAME Workforce in Latest Pay Gap Report
65 UK and European GCs Sign Letter Calling For Law Firms to Improve Diversity
Bird & Bird Pays Female Partners More, Latest Gender Pay Report Shows
Innovation and Technology
Italian Law Firm Enters Partnership with Fintech Association