HSF/LSE Regulatory Reform Forum

The Herbert Smith Freehills and London School of Economics Regulatory Reform Forum was successfully launched in May 2012, building on the collaboration between legacy Herbert Smith and the London School of Economics under the umbrella of the Law and Financial Markets Project.   Membership of the Forum is by invitation only.

The Forum holds roundtable discussions, which aim to bring together regulated firms, policy makers, academics, lawyers, and trade bodies, to explore key topical issues within the regulatory reform agenda.  Typically, following the discussions (which are held under the Chatham House rule so comments are not attributed to individual participants), Herbert Smith Freehills and the London School of Economics will collaborate on the production of a paper drawing together the key issues and commenting on how any concerns might be dealt with.

The paper, which accompanied the inaugural meeting of the forum, is an updated version of the paper summarising a discussion with HM Treasury held in  December 2011 on the objectives, remit, powers and accountability of the new regulators, and sets out key principles to guide reform.  The paper was commended by Lord Turnbull in debate on second reading of the Financial Services Bill (now the 2012 Act).

The Herbert Smith Freehills and London School of Economics Regulatory Reform Forum held a roundtable event to discuss creating an ethical framework for the financial services industry. The event was attended by senior members of the financial services industry, academics, lawyers and key policy makers. This paper summarises some of the matters discussed.

The financial crisis exposed risks that were not foreseen and in the subsequent quest to attribute blame to the financial institutions, their managers, auditors, regulators, credit rating agencies, and politicians, a question was also asked: where were the lawyers? Were lawyers close enough to the events that they should be blamed, whether for their actions, or for a failure to act as gatekeepers.  In its most recent roundtable, discussion the Herbert Smith Freehills and London School of Economics Regulatory Reform Forum debated the role that lawyers can and should play in managing risks in financial institutions.  This paper summarises some of the issues debated, including:

• Practical challenges in identifying, assessing and monitoring legal risks
• Expectations on the role of lawyers in financial institutions
• Consequential liability for lawyers

It also reports on a survey conducted of the firms invited to the forum, on the involvement of the legal function in legal risk management.

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