Market abuse update – April 2016

This will be our last quarterly Market Abuse update before 3 July 2016, the date when both the new Market Abuse Regulation and the Criminal Sanctions (Market Abuse) Directive come into application across Europe. Some significant pieces of the regulatory jigsaw have yet to be slotted into place, so we have set out the current state of play in a little more detail. Both pieces of legislation have significant extra-territorial implications: in this briefing we highlight some quirks in the potential application of the criminal regime.

The advent of new regulation has not led to any significant let-up of regulators' enforcement efforts, and this briefing also reviews some recent cases in the UK, the US and Australia. 

Our full e-bulletin is available here

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Filed under Americas, Asset management, Australia, Banking, Estonia, EU, Europe, European Regulation, France, Germany, Insurance, Investment banking, Investment Funds, Italy, Liechtenstein, Spain, Ukraine, Uncategorized, US

The SFC’s asset management strategy for Hong Kong

In a speech last Friday to the Hong Kong investment Funds Association, Ashley Alder, CEO of the Hong Kong Securities And Futures Commission (SFC) described the SFC's ambitious asset management strategy. 

The SFC's strategy for Hong Kong, which aims to enable Hong Kong to become a global, full-service asset management center, includes:

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Filed under Asia, Asset management, Hong Kong, Investment Funds

Financial firms: protecting customer personal data

A recent case provides a rare example of the criminal prosecution of an individual (in this case the former employee of an insurer) for breach of the Data Protection Act 1988 (DPA). 

David Barlow Lewis was a former employee of the insurer LV. He offered an ex-colleague £3,000 a month to send him the details of customers involved in road accidents. She refused to do so, and Lewis was subsequently prosecuted at Bournemouth Magistrates’ Court for attempting to commit an offence under section 55 of the Data Protection Act 1998 . He had knowingly or recklessly attempted to obtain personal data without the data controller’s consent.

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Filed under Europe, European Regulation, FSA, FSA Rules, Insurance, Sector Updates by Herbert Smith Freehills, UK, UK Legislation, UK Regulations, Uncategorized

DOJ announces new FCPA pilot program to promote self-reporting

On April 5, 2016, the DOJ announced that it is launching a one-year pilot program for FCPA enforcement as a step to continue its effort to target FCPA violations. The program aims to motivate companies to voluntarily disclose FCPA-related misconduct by making it transparent that a company has to voluntarily self-report its FCPA misconduct to receive full mitigation credit. It also provided further guidance on what constitutes "voluntary self-disclosure," "full cooperation" and "remediation."

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Filed under Americas, Bribery and Corruption, Corporate Crime, US

OFAC issues regulations implementing new sanctions targeting Hizballah

On 15 April 2016, the US Department of the Treasury’s Office of Foreign Assets Control ("OFAC") issued regulations to implement the Hizballah International Financing Prevention Act of 2015, authorizing secondary sanctions against foreign financial institutions ("FFIs") that facilitate or conduct certain activities for the benefit of Hizballah.

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Filed under Americas, Corporate Crime, Sanctions and Money Laundering, US

French anti-corruption developments: Sapin II law proposes new anti-corruption rules for businesses

France's finance minister Michel Sapin presented a proposal for a new law on transparency, anti-corruption measures and the modernisation of the economy to the Council of Ministers on 30 March 2016.

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Filed under Corporate Crime

Sanctions update – creation of Office of Financial Sanctions Implementation and changes to UK financial sanctions regime

The Summer Budget 2015 contained a commitment to significantly revamp the UK's approach to the implementation and to the enforcement of financial sanctions, at both the administrative and legislative level.  These changes have now begun to be introduced, through the creation of the Office of Financial Sanctions Implementation ("OFSI") within Her Majesty's Treasury ("HMT") and the proposed introduction of new financial sanctions legislation contained in the draft Policing and Crime Bill (the "Bill").  The Bill provides for an increase in the minimum criminal penalties applicable to breaches of financial sanctions, and introduces a new power for HMT to impose civil monetary penalties in certain circumstances.  The Bill also provides for swifter implementation of UN financial sanctions in the UK.  

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Filed under Corporate Crime, Sanctions and Money Laundering, UK, Uncategorized

Recent developments in Scottish and English bribery enforcement

On 5 April 2016, The Scottish Crown Office and Procurator Fiscal Service ("COPFS") announced the latest resolution of a Bribery Act enforcement action against the Glasgow-based logistics company, Braid Logistics (UK) Limited. Braid agreed to pay £2.2 million pursuant to a Civil Recovery Order and accepted responsibility for contravention of sections 1 and 7 of the Bribery Act 2010 (section 7 being the so-called 'corporate offence' of 'failure to prevent' bribery).

This is the latest development in an exciting few months in anti-corruption enforcement. Earlier this year, in two eagerly anticipated judgments, the Court applied for the first time in a contested corporate case the Sentencing Council's 2014 Definitive Guideline: Fraud, Bribery and Money Laundering Offences (the "Guideline"), and sentenced a company following a successful prosecution under section 7 of the Bribery Act. These two cases, Smith & Ouzman Limited and Sweett Group Plc, represent the first steps in building a body of much-needed experience of the Court's approach to the Guideline, following the first DPA last year. We provide below an overview of the Braid, Smith & Ouzman and Sweett Group cases, and explain how the penalties imposed on the companies were determined.

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Filed under Bribery and Corruption, Corporate Crime, UK, Uncategorized

UK: no Suremime-type duty of care owed directly to customer in connection with past business review

Six months after the High Court's surprising judgment in Suremime Limited v Barclays Bank plc [2015] EWHC 2277 (QB), the recent decision in CGL Group Limited v Royal Bank of Scotland [2016] EWHC 281 (QB) will be encouraging for financial institutions concerned about liabilities arising out of FCA past business reviews.  The Court held that the Claimant’s proposed amendment to the Particulars of Claim – namely, that the Defendant bank directly owed its customers a common law duty of care in connection with the past business review mandated by the FCA (as it now is) – was not arguable. 

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Filed under Asset management, Banking, Commercial Litigation, Funds, Insurance, Investment banking

EU: Final ESMA Guidelines on UCITS V remuneration provisions: ESMA addresses the application of the proportionality principle under UCITS V and AIFMD

The European Securities and Markets Authority ("ESMA") has published its final guidelines on the remuneration requirements of the UCITS V directive (the "UCITS V Guidelines").  The key issue addressed by ESMA is the ability for smaller or less complex managers to disapply certain of the more onerous remuneration requirements (including the "Pay Out Process Rules") on the basis of the proportionality principle.

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Filed under Asset management, EU, Funds