GT London Law Blog

GT London Law Blog

Legal Advisers for a Changing World

UK Review of the Bribery Act 2010 – Committee Concludes New Guidance Needed

Posted in Bribery Act 2010, Compliance Programs, Corporate, criminal law, Government, White collar

In 2018 the House of Lords announced it would set up an ad hoc Select Committee to conduct a post-legislative review of the Bribery Act 2010. Greenberg Traurig Shareholder Anne-Marie Ottaway was appointed Specialist Advisor to the Committee, which today published the report of its findings. The review confirms that the Bribery Act 2010 is “an exemplary piece of legislation” which sets the global benchmark for anti-bribery and corruption legislation.

The Bribery Act was passed, with much fanfare, in 2010 and came into force on 1 July 2011. The Act simplified previous anti-corruption legislation dating back to 1889 and 1906 and introduced for the first time a specific corporate offence of failure to prevent bribery.

Under the Act, the Ministry of Justice (MOJ) was required to publish guidance for businesses on the adequate procedures they would need to implement to have a defence to the failure to prevent offence. The Act applies to UK companies and foreign companies conducting business or part of a business in the UK. It pertains to conduct in both domestic and foreign jurisdictions and applies to bribery in both the public and private sectors.

Following the Act’s introduction, there was much concern about the impact it would have on the ability of UK businesses to conduct business abroad; this concern was a key focus of the Committee’s review, which covered the following:

  • Length of investigations
  • Police resources and training
  • Lack of cooperation and coordination
  • Revisions to the MOJ Guidance
  • Facilitation payments
  • The importance of a risk assessment
  • Corporate criminal liability
  • The adequate v reasonable debate
  • Deferred Prosecution Agreements (DPAs)
  • DPAs not a substitute for prosecuting culpable individuals
  • Scotland

Click here for the full GT Alert on the Select Committee’s findings.

LIBOR and “No-Deal” Brexit

Posted in Brexit

One of the consequences of a “no-deal” Brexit would be that the United Kingdom would no longer have access to the European financial market. This would affect LIBOR as a trusted and widely used benchmark.

LIBOR vs. EURIBOR

Currently, two relevant benchmarks exist in the European Union: LIBOR and EURIBOR. LIBOR stands for “London Interbank Offered Rate” and is a benchmark that is used for – among other things – loans based on Loan Market Association documentation. LIBOR is made available in five different currencies: U.S. dollar, British pound, Japanese yen, Swiss franc, and euro. EURIBOR stands for “Euro Interbank Offered Rate” and is, simply put, the interest rate at which European banks lend money to each other. EURIBOR is only available in euros. Both benchmarks are determined daily, but while LIBOR focuses on the London banking system, EURIBOR takes into account the entire European Union.

Developments around LIBOR

LIBOR has been the subject of increased scrutiny after it emerged that certain banks had manipulated LIBOR rates. Furthermore, insufficient activity in the unsecured interbank market raised questions about the sustainability of the LIBOR benchmark. Closely related to these developments is the new EU Benchmarks Regulation (EU) nr. 2016/11 and the development of a new secured overnight interest rate by the European Central Bank (ECB). The Benchmarks Regulation went into effect on 1 January 2018 and includes a two-year transitional period. The new interest rate for the euro will be based on data already available to the Eurosystem and is anticipated to be finalized before 2020.

The Future of LIBOR

Andrew Bailey, chief executive of the UK Financial Conduct Authority (FCA), has spoken to all current panel banks about agreeing voluntarily to sustain LIBOR until the end of 2021. However, a “no-deal” Brexit most likely will cause LIBOR to lose its authorized benchmark status in the European Union. This would leave nine months for the reference rate’s administrator to reapply as a third-country provider. Thus, even if LIBOR survives until 2020, a no-deal Brexit could come with enormous risks.

Takeaway

Market participants may wish to review and consider the amendment and waivers provision in loan agreements being concluded now, taking into account a possible “no-deal” Brexit and the development of the new overnight interest rate by the ECB. Furthermore, lenders should closely review the requirements posed by the Benchmarks Regulation to ensure they are compliant with its provisions.

To read more about Brexit, click here.

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The Financial Conduct Authority – Part 2 – Criminal & Civil Insider Dealing

Posted in criminal law, FCA, Financial Conduct Authority, insider dealing, insider trading, White collar

In a February 2019 speech, the FCA’s Director of Market Oversight, Julia Hoggett, said the following:

The life blood of all well-functioning markets is the timely dissemination of information, without which effective price information cannot take place. The malignant form of that same life blood is the misuse or inappropriate dissemination of that information.

The ‘malignant form’ to which Ms Hoggett referred is insider dealing, where someone trades on the basis of information not known to the public in order to make a gain or avoid a loss, or where one discloses such information and/or encourages others to trade in relation to it.

Insider dealing and market manipulation were both key parts of Ms Hoggett’s speech, which is an important outline of what the FCA sees as the foremost issues for the firms it oversees. Ms Hoggett also referred to the FCA update to its ‘Financial Crime Guide’ for firms. A forthcoming GT Alert will address the updated guide and considerations for corporates flowing from insider dealing.

In this GT Advisory we focus on the definition of and defences to insider dealing in both the criminal and civil context, as well as the ways in which individuals in the UK have been pursued for such conduct.

To read the full GT Alert, click here.

I Smell a Rat: SFO Looks to Informants – Dangling the Carrot of Immunity?

Posted in criminal law, White collar

Lisa Osofsky, the new director of the UK Serious Fraud Office, says her agency should use insiders and co-operators to bring to life by way of live evidence the document-heavy cases it prosecutes.

Speaking to the Commons Justice Committee in December 2018, Ms Osofsky alluded to the slow pace of SFO investigations as one of the agency’s key criticisms and suggested that getting an ‘insider’ to help the SFO understand what was going on could be helpful in presenting cases to juries.

These comments are perhaps unsurprising from Ms Osofsky, who was previously a federal prosecutor and assistant general counsel to the FBI in the United States, where plea deals and immunity in exchange for testimony are more prevalent.

In a speech delivered earlier the same month, Ms Osofksy recognised that historically, cooperators in the UK have been used mostly in the context of gang-related and terrorism offences.

The statutory power to grant immunity and other protections can be applied in any type of case. Ms Osofsky has made clear that she and her SFO colleagues are ‘[intent on] exploring this area in the white-collar world’.

In this GT Advisory, we discuss the controversial history of ‘grassing’ in the UK and describe the process of obtaining immunity and other protections.

To read the full advisory, click here.

Brexit Brinkmanship

Posted in Brexit, International Law, International Trade

It is now less than two months until 29 March 2019, the date set for the UK’s withdrawal from the EU. At this late stage, the terms of the UK’s withdrawal have still not been settled, and the Brexit issue remains clouded in uncertainty.

As a result of a vote in the UK Parliament 29 January, the UK will now seek to renegotiate one of the terms of the withdrawal agreement agreed in draft with the EU at the end of 2018. This term is the “Irish backstop”, the dual purpose of which is to preserve an open border between Ireland and Northern Ireland post-Brexit and to guarantee the integrity of the EU’s post-Brexit borders. The EU’s initial reaction to the vote has been to indicate that it sees no reason to renegotiate. Without amendment to this term, however, the UK’s withdrawal agreement as a whole is very unlikely to receive the parliamentary approval required for it to become binding on the EU and UK.

Key points in light of these developments:

  • A no-deal Brexit on 29 March is still possible.
  • An extension to the 29 March Brexit date is also still possible.
  • Businesses should prepare for a no-deal Brexit.
  • The withdrawal agreement is not the final EU/UK agreement.

To read the full GT Alert, click here.

Top 5 Predictions for UK White Collar Defence in 2019

Posted in Brexit, criminal law, Government, International Law, White collar

What does 2019 have in store for white-collar defence in the UK? In this GT Alert, we list our top 5 predictions relating to Serious Fraud Office (SFO) Director Lisa Osofsky, who indicated various areas of focus for her tenure; Brexit and the potential loss of the European Arrest Warrant regime and the U.K.’s access to EU shared crime agency databases; U.K. criminal law and corporate criminal liability; litigation privilege in the context of an internal criminal investigation, and extraterritoriality in terms of the SFO’s power to compel overseas companies to produce material; and transatlantic collaboration – we expect an increasingly U.S. approach to the way the SFO operates.

To read the full GT Alert, click here.

The Financial Conduct Authority – Part 1 – Market Manipulation

Posted in criminal law, FCA, Financial Conduct Authority, spoofing, White collar

The term ‘market manipulation’ is a broad one which can mean a number of things.

In this GT Advisory, we consider how market manipulation is approached in the U.K. in both a civil and criminal context, and how it has been enforced by the U.K.’s Financial Conduct Authority (FCA). We also discuss spoofing, a tactic used by traders to gain an unfair advantage.

To continue reading, click here.

Failure to Prevent Tax Evasion: Forgotten, but Not Gone

Posted in criminal law, Tax, tax evasion, White collar

The new offences introduced by the Criminal Finances Act 2017 (the Act), although widely publicised in the months leading up to its commencement, have received little attention since from commentators and, seemingly, the enforcement authorities.

The two new offences govern U.K. and non-U.K. tax and are targeted at criminalising a corporate entity or partnership’s (broadly, a ‘relevant body’) failure to prevent the facilitation of tax evasion by persons acting for or on behalf of it, as an employee, agent, or a person performing services for or on behalf of the company.

To read the full GT Advisory, click here.

ECJ Confirms UK Can Withdraw Brexit Notice Unilaterally

Posted in Brexit, International Law, International Trade

The EU Court of Justice ruled today, 10 December, that the U.K. can unilaterally withdraw its “Brexit” notification to the EU. The ruling follows the advice of the advocate general to the EU Court last week, that the U.K. should be able to revoke the notification without the consent of the other 27 EU member states (see GT Alert, Brexit – Can the U.K. Stop Brexit Without EU Consent?).

Further, the U.K. parliament’s House of Commons vote on the draft EU withdrawal agreement, scheduled for 11 December, was today postponed by Theresa May to allow time to secure additional reassurance from the other 27 EU member states in relation to the Irish backstop, which she recognizes is the main obstacle to securing parliamentary approval of the draft agreement, but at the same time a necessary part of any withdrawal agreement.

To read the full GT Alert, click here.