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. Ashurst sees five partner departures in NY amid office restructuring
Ashurst aims to shift the focus of its US structured finance practice as the remaining five CLO partners prepare to move to Chapman and Cutler.
Five finance partners specialising in collateralised loan obligations (CLOs), who initially joined as part of a ten partner team hire from McKee Nelson, are the last of the team to depart the firm’s New York office, highlighting a shift in focus for its US structured finance practice.
Partners Pat Quill, David Nirenberg, Steve Kopp, Doug Bird and Tom Glushko have already left the firm, confirming that Ashurst is scaling back its CLOs offering. The firm’s global head of finance Helen Burton has argued there is “a lack of alignment with the wider global finance business”, particularly given that the firm no longer has a global CLO practice group.
The balance of the firm’s finance practice first began to shift away from CLOs when securitisation heavyweight David Quirolo left the firm’s London office to join Cadwalader, Wickersham & Taft in September 2014.
These departures mark the last of the McKee Nelson team to exit Ashurst. US head of securities Scott Faga and former US managing partner Eugene Ferrer both left for Paul Hastings in 2015, whilst Alice Yurke and Richard Davis joined Jones Day and DLA Piper respectively, and Michael Voldstad retired from the partnership earlier this year.
The restructuring has left Ashurst with three banking and finance partners in New York, strongly focused on banking, energy and infrastructure. As the firm looks to replenish it New York capability, it is expected that upcoming hires will likely be made in the projects and banking space, stepping away from the structured finance work that the firm’s New York practice was previously known for.
As Ashurst begins to make a comeback from the flurry of departures it faced last year, it seems to a fitting time for the firm to reassess its strategic hiring priorities. They have already begun rebuilding the European finance practice, most recently hiring Linklaters leveraged finance senior associate Pierre Roux as a partner in its Paris office in May this year, and appointing banking partner Mario Lisanti to head up the Milan finance practice from Norton Rose Fulbright.
2. Proposals to extend Senior Managers Regime released
The Senior Manager’s Regime (SMCR) is to be extended to 47,000 firms including dentists, gyms and tool hire companies that offer credit to customers, according to FCA proposals released this week.
The Financial Conduct Authority also estimated that the expansion will cost firms £550m, with up to £190m of ongoing costs for the firms involved. It will apply to all solo-regulated firms and replace the current Approved Persons Regime.
Proportionating the level of requirements to the size of the firm, under the proposals companies have been categorised as limited, core or enhanced in scope. Those identified as limited are expected to face the highest set up and ongoing costs, whilst there will be additional requirements that apply only to the ‘enhanced’ regime (less than 1% of institutions). These include additional Senior Management Functions, additional Prescribed Responsibilities, a Responsibilities Map, Handover Procedures and the requirement that there be a Senior Manager responsible for every area of the firm (Overall Responsibility).
As a result, the FCA have warned that some cost increases on firms will pass through to consumers in the form of higher prices, while senior managers “may demand bigger pay deals”. However, the watchdog believes as a result of the changes, the quality of products and services offered should increase, with the extension of the SMCR being essential to drive culture change forward within the sector.
Entering into force in March 2016, and covering 900 banks and building societies, the SMCR ensures greater accountability for individual actions by more clearly defining the roles and responsibilities of those in senior functions. While it currently applies just to lenders and insurers, the extended rules are expected to come into force by 2018.
The Treasury called for the broadening of the new regime two years ago when it also dropped a plan to “reverse the burden of proof” for managers, which would assume the senior manager in charge was guilty unless proven otherwise if misconduct was discovered.
Part of the changes would also see the scrapping of the FCA register. Whilst senior managers will still be listed, most approved persons will become significant harm functions and will not need to be pre-approved by the FCA or be on the register. It is also a cause for concern as there will be no publically available list of advisers for consumers to review.
The consultation period now runs until 3rd November for the industry to comment on the proposals released on the FCA’s website. With the FCA likely to pay particularly close attention to areas like training in the conduct rules, risk management and individuals whose jobs impact customers directly, it is clear that many of the expanded firms will need to prepare for some critical milestones and get ready for a step-change in their internal policies and procedures.
Movers & Shakers of the week
Freshfields managing partner Chris Pugh steps down before the end of his term
London head of regulatory departs Quinn Emanuel after months of joining
Quinn Emanuel Urquhart & Sullivan London financial services and regulatory partner David Berman will be joining Latham & Watkins in August this year, just months after resigning from Macfarlanes to join the firm
Former general counsel for HK regulator joins O’Melveny
Competition expert Philip Monaghan has left his position as general counsel for the Hong Kong Competition Commission to become a partner in the HK office of O’Melveny & Myers.
HSF arbitration partner exits New York office
Arbitration partner Laurence Shore leaves Herbert Smith Freehills in New York to relocate to Italy, joining Italian firm BonelliErede in Milan.
Freshfields bolsters international IP offering
Menachem Kaplan has joined Freshfields Bruckhaus Deringer in the US as its new head of IP for the region. He joins from Paul, Weiss, Rifkind, Wharton & Garrison where he was counsel.
KWM make first European lateral partner hire since UK office shut down
King & Wood Mallseons have hired corporate partner Hui Zhao into the firms Frankfurt office from German-based Noerr.
Owners of Snapchat looks for its next GC
Social media company Snap needs to appoint a new general counsel as head of legal Chris Handman steps down
Linklaters hire PE veteran in Germany
Christopher Kellett has joined Linklaters’ private equity practice in Frankfurt after having retired from Clifford Chance a few months ago
Ashurst loses a team of structured finance partners following US restructuring
Five NY-based finance partners depart Ashurst as the firm drops its collateralised loan obligation (CLO) offering. Pat Quill, David Nirenberg, Steve Kopp, Doug Bird and Tom Glushko will all join Chapman and Cutler
Two non-lawyers have been promoted to senior non-equity partners at Mischon de Reya