Financial Services—a review of 2014’s cases

Financial Services—a review of 2014’s cases

Our panel of experts examines the impact of 2014’s cases on financial services lawyers and their clients.

The experts

Duncan Black, partner, contentious financial services, Fieldfisher

Jon Holland, partner and co-head of the global financial services litigation team, Hogan Lovells

Nathan Willmott, partner, financial services investigations and head of the commercial dispute resolution group, Berwin Leighton Paisner


What were the most significant cases of 2014?

Duncan Black: Aside from the main cases regarding Libor and the Foreign Exchange there was an interesting Financial Conduct Authority (FCA) investigation against a large and well known retail asset manager called Invesco. There were two Invesco companies involved and they were fined over £18.5m by the FCA for failings in their fund management business and through those failings they exposed their investors to a much higher level of risk than their investors thought they were running.

The FCA found that Invesco hadn’t recorded the trades of their clients on a timely basis or managed their allocations by their fund managers’ trades and they were also criticised for the documentation that was given out to investors. There’s been a lot of discussion over the years about the paperwork you get when you invest—it’s swung from not being enough to now deluging people with information—but the FCA said in this case the key investor information in the prospectuses given to the investors on some of these funds weren’t sufficient.

I think this is interesting for a few reasons. Firstly, although there was a very heavy fine there were no situations where investors had actually lost money. It was a penalty for not doing it in the correct way whether or not investors had suffered.

Secondly, you also don’t see this type of business being targeted by FCA enforcement quite as much as you see broking or banking.

It’s particularly important for businesses in retail investment management to observe very high standards because the consequences can be much more dramatic if they are affecting retired people for example, and I think the FCA is particularly keen to make sure that retail business is conducted correctly.

Nathan Willmott: I think the case that has kept most people very busy during 2014 has been the investigation into the foreign exchange markets (Forex). It’s a hugely intensive process in reviewing and analysing communi

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