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). Another fine hits global bank for forex manipulation
Deutsche Bank is the latest in a series of banks over the last few months to receive a financial penalty from US regulators.
Reported on Wednesday, New York’s Department for Financial Services (DFS) has fined Deutsche Bank $205 million for the improper conduct of its foreign exchange trading business. Dating back to its practices from 2007 to 2013, the regulator’s probe discovered that certain traders and salespersons within the bank are guilty of presenting “improper, unsafe, and unsound conduct” by coordinating trading activity through online chat rooms, sharing confidential customer information and trading aggressively to manipulate currency rates.
Deutsche Bank was, at this point in time, the world’s largest forex dealer. However, the total amount in penalties awarded to the bank for forex manipulation sits at $357 million – certainly not the most severe the industry has seen when compared to other global banks, some of whom have received fines of over $1 billion in relation to this type of market manipulation.
Nevertheless, the German lender, whose investment bank has notoriously been shrinking over the last few years, is still in the sights of multiple global regulatory bodies. Investigations are largely ongoing in the US, where Deutsche’s investment banking arm has focused most of its restructuring plans.
This fine draws a line under all currency-rigging probes into Deutsche Bank, what remains however are a number of US probes, particularly from the nation’s Justice Department. These include a suspected violation of US sanctions against Iran pre-2008, and the practice of ‘mirror trades’ which unethically profited the bank’s Russian clients.
These will likely add to the $17 billion that German’s largest bank has already spent on legal costs over the last decade, as well as the significant investments that continue to be directed towards its governance, regulatory and compliance functions.
2). A&O refuse to submit updated gender pay data for partners
Allen & Overy have been slammed by the Business, Energy and Industrial Strategy committee (BEIS) for refusing to disclose its partner gender pay gap data.
The committee, which is investigating the compliance of businesses in reporting their gender pay gaps, requested that the magic circle firms restate their data to include partner compensation figures in their pay gap reporting.
Whilst Linklaters and Clifford Chance revised their original submissions in April to reflect this, Freshfields and Slaughter and May have submitted updated figures to the BEIS, which were published on Wednesday.
On the other hand, Allen & Overy refused to submit updated gender pay reporting information, stating that partnership data will be included in their next reporting round in April 2019.
In response to this, Committee chair Labour MP Rachel Reeves accused the firm of ‘dragging its feet’ on gender pay reporting regulation, and exploiting weaknesses in the reporting requirements in a statement.
“It will surprise no-one that including partners in reporting reveals a wider gender pay gap. The picture wasn’t a pretty one but the Big Four accountancy firms at least acknowledged the problem by including partner data, a social duty which somehow escaped, with some exceptions, the major law firms. Allen & Overy can’t even come clean on its partner data now. It’s easy to talk the talk on diversity and inclusion but if a business is dragging its feet on providing even basic information about its gender pay gap then it begs the question of how seriously it takes its responsibilities to valuing all its staff and how dedicated it is to committing to promote female associates to partner level.”
Since the gender pay reporting deadline in April, a number have firms have now posted their partner data. Reed Smith, Travers Smith and Pinsent Masons all included partnership data in their gender pay reporting calculations, but have done so in different ways with some firms choosing only to report the gender pay gap between partners, rather than incorporating these figures into their workplace data as a whole. With many other law firms choosing to stick with their employee-only figures, this has made it difficult to compare the gender pay gaps between firms.
Whilst the first round of gender pay reporting has done well to increase the transparency of the gender pay gap in law firms, and further highlight the problem that not enough women are making it to the senior ranks within firms, further clarification and guidance is needed on the reporting guidelines for partnerships, and how to take account of the pay of members of a firm who are not employees.
This has become all the more pertinent, as of this week women overtook men as the largest number of practising solicitors in England and Wales according to data from The Law Society.
For our special report on the outcome of gender pay reporting in leading UK law firms, please click HERE.
3) Movers & Shakers
Lone Star lawyer Shane McDonald to join the banking team of White & Case
Bob Penn to return to A&O less than two years after he quit for Cleary
Office Openings & Closings