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. Process not Politics: High Court rules Brexit will not take place without parliamentary scrutiny
In one of the most constitutional court cases in generations, the High Court has ruled that Parliament must vote on whether the UK can start the process of leaving the EU.
In holding the executive to account, the judiciary has created a nightmare scenario for Prime Minister Theresa May who insisted the government alone would decide when to trigger Article 50, intending to formally notify the EU of the UK’s intention to leave by the end of March.
Within minutes of the ruling by the Lord Chief Justice and two other judges, Liam Fox, the international trade secretary, told the House of Commons that the government would appeal to the Supreme Court, scheduled to take place on 7-8 December.
The legal dispute focused on the interpretation of the wording of Article 50 of the treaty on European Union, which says any member state may leave “in accordance with its own constitutional requirements” – an undefined term.
Nevertheless, in the landmark ruling the three judges looking at the case unanimously, rejected the government’s argument that it could use its “prerogative”, or executive powers to trigger withdrawal under Article 50.
They added that triggering Article 50 would fundamentally change UK people’s rights – and that the government cannot change or do away with rights under UK law unless Parliament gives it authority to do so.
This has huge implications on both the timing and terms of Brexit, and could make any future deal subject to parliamentary control.
As for now, questions remain as to whether the Supreme Court will uphold the decision – most definitely causing the PM’s March timetable to collapse – and if so, if Parliament are likely to vote in the same way as the people. Despite the majority of MP’s voting against Britain’s exit, many of them represent constituencies that wanted to leave.
Although the nature of how parliament will be consulted remain unclear, critics argue that triggering Article 50 as a result of an act of parliament would steer the UK towards a ‘softer’ exit with more ties to the union and a more open immigration policy.
Whatever the decision of the Supreme Court, the significance of this ruling lies in its interpretation of the law in spite of the pressure of politics. With the constitutionality of the Government’s right to trigger Article 50 unfounded, and the future impact of this yet to be foreseen, ultimately this case represents democracy in action as an independent judiciary holds executive powers to the account of the people.
2. Former BlackRock manager pleads guilty to insider trading
A former BlackRock manager has pleaded guilty to insider dealing as the FCA turn their attention back to investigating those who trade using inside information.
Ex-BlackRock portfolio manager Mark Lyttleton appeared in Southwark Crown Court on Wednesday where he pleaded guilty to two counts of insider dealing, using information he gathered during his time at BlackRock.
Lyttleton gained knowledge of a proposed takeover of EnCore Oil by Cairn Energy in October 2011 whilst sitting in the Fundamental Equity Team at BlackRock. He then traded in securities related to these companies, amounting to 175,000 worth of shares, which was conducted through an overseas asset manager trading on behalf of a Panamanian registered company. The indictment also claims that Lyttleton subsequently dealt in call options after also learning of Cairn’s discovery of oil in Greenland.
In the UK, the maximum sentence for insider trading is seven years, although the judge presiding over the case has declared that Lyttleton’s early plea will be taken into account. He is due to be sentenced at Southwark Crown Court on 21st December.
During his stint at the global investment management firm, Lyttleton was tipped to be one of their rising stars, with colleagues particularly commending him for his management of BlackRock’s UK Dynamic and Absolute Alpha portfolios. He left the fund manager ahead of his arrest in 2013, for reasons unrelated to the investigation, the FT reports.
The FCA first prosecuted for insider trading in 2008 and has racked up a total of 30 convictions relating to the crime to date. The regulator handled one of the UK’s largest cases for insider trading earlier this year, which resulted in four convictions and three acquittals. Labelled Operation Tabernula, the case brought about a record four year prison sentence for ex-Deutsche Bank MD Martyn Dodgson and was the first major investigation for the FCA following the extensive probes into the manipulation of Libor rates.
This guilty plea comes at a time when the FCA is carrying out an extensive review of the asset management sector, focusing on competition between buy-side institutions and the sustainability of its regulatory regime. The review, due to be published in early 2017 will no doubt produce areas of concern and weaknesses, that will need to be addressed.
Movers & Shakers of the week:
TLT head to lead the firm for 18 years
TLT managing partner David Pester has been re-appointed in his position for a further three years, which will bring his total number of years leading the firm to 18
Ropes senior partner set to retire this year
Maurice Allen, Ropes & Gray’s co-founder of the London office and senior partner, has announced his retirement will take place at the end of the year. His replacement is yet to be announced
Asahi Europe appoints new head of legal and company secretary
Former group senior counsel Edward Perks is promoted to head of legal and company secretary after having acquired European beer makers SABMiller
Linklaters makes changes to senior management of their corporate team
Newly appointed head of corporate at Linklaters Aedamar Comiskey has given three corporate group head roles to Simon Branigan, Nick Rumsby and Iain Wagstaff.
Legal AI start up gains former magic circle managing partner
Artificial Intelligence start up TagDox has added former Linklaters managing partner Tiny Angel to its advisory board
Santander UK hires new COO and legal and regulatory counsel
John Bennett has departed his role as GC at the Bank of Ireland to join Santander UK as their senior counsel for legal and regulatory as well as their chief operating officer
KWM loses five lawyer team in Germany
King & Wood Mallesons’ German banking and finance head Sabine Schomaker will be joining Taylor Wessing along with fellow partner Clemens Niedner plus one counsel and two associates
Cooley gains new member of global management committee
London tax partner Natasha Kaye has been appointed a position on Cooley’s global management committee
PwC Legal gains six new partners in Sydney and Melbourne
PwC Legal has hired six new partners in Sydney and Melbourne including Clifford Chance Australia co-founder and DLA Piper’s former Australia head
Freshfields partner joins Matrix Chambers
Raj Parker is leaving his roles as dispute resolution partner at Freshfields Bruckhaus Deringer to join Matric Chambers as an associate member
HSF bolsters Paris real estate capability
Real estate partner David Lacaze, along with one associate, leaves Paul Hastings’s Paris office to join Herbert Smith Freehills
W&C has added three more HSF partners to its Australia offering
Senior associates Adeline Pang and Ged Cochrane, and special counsel Michelle Keen are all leaving Herbert Smith Freehills to join White & Case in Melbourne as partners
Office Openings & Closings
Norton Rose sets up in Monaco
Norton Rose Fulbright will be opening an office in Monaco early next year in a bid to grow shipping practice
Mergers & Alliances