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. HSBC faces fresh forex legal battle
HSBC is facing a fresh legal battle over allegations that its traders manipulated foreign exchange markets for their own profit at the expense of their clients.
The claim comes from ECU Group, a UK-based currency investment firm, which has filed an application to London’s commercial court asking for HSBC to be required to hand over records relating to three large foreign exchange orders it executed in 2006.The firm’s three “stop-loss” trades — each worth over $100m — were designed to limit its downside by committing to sell one currency and to buy another if the exchange rate passed a pre-determined threshold. However, each time ECU placed an order, the rate quickly dropped after rising high enough for the trade to be executed.
Although the firm suspected it was being defrauded by HSBC traders “front running” its forex orders at the time, it was told that no wrongdoing had been found after a full internal inquiry had taken place.
ECU are now contesting these findings after the US Department of Justice (DoJ) charged two of HSBC’s top forex traders with “front running” a client’s trade last year, the first people to face U.S. criminal charges arising from an investigation of foreign-exchange rigging at banks. This came after the bank hired US firm Cleary Gottlieb to carry out a review of its forex trades — including the deal the two traders were accused of cheating on — and found no breaches of its code of conduct.
As such, ECU are asking for HSBC’s interbank dealing tickets, deal log entries, any relevant Bloomberg instant messages for the trades as well as all documents relating to the internal inquiry carried out by the bank as part of a pre-action disclosure, which often precedes a full scale law suit. If the court finds evidence that there was concealment by HSBC it can waive the statute of limitations, which would normally prevent a legal action more than six years after an instance of wrongdoing.
This comes after regulators uncovered systematic rigging of the $5tn-a-day foreign exchange market by several global banks, which were fined $4.3bn three years ago. Although HSBC did not plead guilty to conspiring to manipulate currency prices, in 2014 it paid a $618m fine to US, UK and Swiss regulators to resolve related probes, and continues to be investigated by the DoJ.
2. Law firms taking steps to attract and retain star female lawyers
Law firms have been making a further push towards improving diversity & inclusion (D&I) in their organisations, as three firms have released innovative takes on how they plan to improve workplace culture.
Pinsent Masons this week announced its acquisition of diversity consultancy Brook Graham. The consultancy, although wholly owned by Pinsents, will continue to operate as its own brand, whilst bringing in managing partner John Cleland and senior partner Richard Foley as board members.
Brook Graham advises on the creation and implementation of D&I policies, working with all levels and stakeholders of an organisation to bring about culture change. The business has built an impressive client list, including Shell, HSBC and BAE Systems.
Foley has commented that this acquisition is “a chance to turbocharge our diversity offering”, whilst also presenting a further opportunity for Pinsents to extend their brand beyond traditional legal services. The firm recently purchased a 20% stake in New Law startup Yuzu, which offers an alternative business model to managed legal services.
Also in the news this week, it was reported that Travers Smith are considering allowing lawyers to take long-term career breaks after childbirth in an attempt to retain its female lawyers and improve equality and diversity amongst the firm. The proposal would allow lawyers time off during the early years of childcare and provide training and support during this time to keep their expertise relevant and up to date.
Travers are one firm to have recently been making headway in its aims to increase gender balance. The firm released an all-female promotions round this year, with four women joining the partnership. Although its partnership still remains at 20% female, senior partner Chris Hale comments: “We want to ensure that a higher proportion of our good women lawyers who join as trainees or associates stay with us for longer.” “The trend has been one of gradual improvement, and we think that trend will continue.”
Meanwhile, Cleary Gottlieb Steen & Hamilton is also making changes to its maternity leave provisions as part of a broader overhaul to its benefits package in London. The firm carried out an exercise, benchmarking its policies against law firms, banks and auditors, and have decided to increase maternity leave provisions to 30 weeks full pay from the previously given 20 weeks.
There are some interesting developments being made in this space, with numerous firms beginning to take advantage of the opportunities available for retaining and attracting some of the City’s top female talent. If you would like to learn more about gender equality in the legal sector or law firm D&I policies, please get in touch with Researcher Emily Clews at firstname.lastname@example.org or on +44 (0) 20 3642 1870.
Movers & Shakers of the week
Thames Water begins panel overhaul as its sole adviser BLP is up for review
SocGen starts global panel review, expected to be finalised by September
New appointments made at Norton Rose amidst pre-merger management shake-up
Amali de Silva joins Channel 4 as its head of legal and compliance from media litigation firm Wiggin, after long-standing GC Prash Naik left in April
Ropes & Gray loses two finance partners
Finance partners Mark Wesseldine and Fergus Wheeler have left the City office of Ropes & Gray to join King & Spalding
Graeme Wood has joined Lewis Silkin as its chief operating officer, having previously worked at CMS Cameron McKenna Nabarro Olswang as director of change
HSF alliance in Singapore adds to its office
Corporate partner Eugene Lee has departed Latham & Watkins to join Herbert Smith Freehills’ formal law alliance firm Prolegis in Singapore
Gibson Dunn makes play for four-partner Ashurst team in Paris
Dispute resolution partners Jean-Pierre Farges, Eric Bouffard and Pierre-Emmanuel Fender leave Ashurst to set up a litigation offering for Gibson Dunn & Crutcher in Paris. Also joining the move to Gibson Dunn Bertrand Delaunay, the former Ashurst managing partner
Litigation boutique hires fraud specialist
Stewarts Law has hired Dechert litigation partner David Hughes to its commercial litigation practice
Office Openings & Closings
Andersen Tax & Legal sets up third German office in Cologne
Six Osborne Clarke lawyers depart the firm and prepare to launch procurement boutique in Cologne
Mergers & Alliances
Pinsent Masons increases diversity offering through acquisition of diversity consultancy Brook Graham
Norton Rose Fulbright prepares to vote on merger with Australian firm Henry Davis York