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.) Regulators reach another settlement in the aftermath of Libor
Deutsche Bank paid a further settlement to US regulators this week for their involvement in rate manipulation from 2005 to 2009.
Announced on Wednesday, this week the German bank will be adding an additional $220 million to their payments towards rate rigging, confirming its spot as the firm with the most settlements in relation to the Libor scandal.
Not dissimilar from Barclays’ $100 million Libor settlement in August last year, Deutsche’s payout is the result of a US investigation discovering that false rates led to inflated borrowing costs and harmed government not-for-profit entities in New York and throughout the country. Attorney General Eric T. Schneiderman declared: “We will not tolerate fraudulent, manipulative or collusive conduct that interferes with or undermines confidence in our financial markets. Large financial institutions, like all other market participants, have to abide by the rules.”
As US regulators continue to probe into the long-term manipulation of benchmark interest rates that affected hundreds of billions of dollars of loans and hundreds of trillions of derivatives, the FCA have begun looking into a reliable alternative to the inter-bank lending rate, Libor. Whilst governance improvements have been made by banks, and no evidence has been cited of further rigging attempts, FCA chief Andrew Bailey believes that Libor in its current form is unsustainable, and will likely be phased out by 2021.
The BBC has reported that the $220 million penalty resolves the final inquiry into Deutsche Bank from US regulators. However, as further inquiries into multiple global banks remain ongoing, we expect to see further settlements on the horizon.
2.) “We are not infallible”: second data breach hits global offshore firm Appleby
Global offshore firm Appleby admitted it suffered a data breach in 2016 following a statement released on Tuesday.
The statement was issued in response to enquiries from the International Consortium of Investigative Journalists (ICIJ), who also exposed the details of tax evasion and fraud in offshore companies in the release of the Panama Papers in May 2016.
As such, media reports have suggested that clients of the Bermuda-based firm, many of which are high-net worth individuals, could see their data leaked to the press in the coming days.
Cyber-attacks are becoming an increasing threat in the legal sector, with law firm’s access to confidential client information highly valuable.
In June, DLA Piper became collateral damage following a cyber-attack on one of its software suppliers in the most high-profile incident involving a law firm to date. This downed the firm’s emails for two days, and landline and computer systems for over a week, as the firm’s IT risk management team dealt with the malware attack.
Lack of investment into IT infrastructure has been a big issue facing the sector for some time. The majority of law firms reported that they suffered a security incident in the past 12 months according to PwC’s Law Firm survey 2017, whilst the SRA reported the number of cyber thefts have doubled in the first half of this year, from 21 cases to 45 cases.
Despite the increasing threat levels, only 16% of firms admit to having business continuity plans and a resilience framework in place, with far fewer of these firms testing these procedures on an annual basis.
It will be interesting to see what if any wrongdoing emerges from the Appleby cyber-attack, and whether this will promote firms to take a more active approach to their information security in the future.
3.) Movers & Shakers
Moves
DWF Banking and Restructuring heads to exit for rival firms
The firm’s head of business restructuring Gavin Jones, and head of corporate banking Jonathan Edwards have both resigned from DWF to join Hill Dickinson and Browne Jacobson respectively.
Funds partner leaves Ropes & Gray for K&L Gates
Michelle Moran is departing Ropes & Gray’s London base, in what is the eighth partner exit for the office this year.
Mergers & Alliances
Merger talks between Clyde & Co and Sedgwick falter
Office Openings & Closings
US litigation boutique Kobre & Kim opens in Shanghai
Herbert Smith Freehills to launch in Milan with Simmons hire
Wiggin acquires four-partner London IP boutique and hires Osborne Clarke partner
Kennedys to launch in Bermuda with Sedgwick office
Partner Promotions