Regulatory/Compliance Archives

The Potentially Damaging Effects of Non-Compliance with PD57AC

by Harry Denlegh-Maxwell and Daisy Daynes | Oct 22, 2024 | Investment, Court Judgment, Regulatory/Compliance, United Kingdom

On 14 August 2024, in the case of Timothy Fulstow and Robert Woods v Jeremy Francis [2024] EWHC 2122 (ChD) (Fulstow), the High Court dismissed a high value investment claim, partly because the claimants’ witness statements were in clear contravention of Practice Direction 57AC (PD 57AC).

This case acts as a cautionary tale for legal representatives and their clients. It not only highlights the importance of complying with the requirements of PD 57AC when preparing witness statements, but also draws attention to the personal, albeit professional, obligations of lawyers when signing declarations of compliance with PD 57AC.

In his judgment, Deputy High Court Judge David Stone made a point of criticising the solicitor representing the claimants for submitting a ‘false’ declaration that the witness statements were compliant with PD 57AC, when they were clearly not. He went as far as questioning the suitability of the representative, suggesting that “any solicitor properly practising in this court ought to have known [that the witness statements did not comply with PD 57AC]”.

The Key Provisions of PD 57AC

PD57AC was introduced in 2021 to prevent the perceived “over-lawyering” of witness statements, and to address long-held concerns that witness statements were often too

Court of Appeal Rules in Favour of the FCA in Significant Redress Decision for all Regulated Firms

by Harry Denlegh-Maxwell, William Merry and Rebecca Geers | Oct 22, 2024 | Court Judgment, Regulatory/Compliance, Private Equity, United Kingdom

Introduction

In a landmark ruling, the Court of Appeal recently confirmed that the FCA can impose a redress requirement on an FCA-regulated firm under section 55L Financial Services and Markets Act 2000 (FSMA) without needing to meet the pre-conditions for a statutory market-wide redress scheme under section 404F FSMA.

Background

BlueCrest Capital Management UK LLP (BlueCrest) was the subject of an FCA investigation in 2021. The conclusion of this investigation found that the hedge fund breached Principle 8 of the FCA’s Principles for Businesses by failing to properly mitigate conflicts of interests when acting as an investment manager. BlueCrest was accused of making decisions that ultimately benefited an internal fund, whose stakeholders included senior partners and key employees, to the detriment of an external fund with external investors. As recompense, the FCA ordered a £40,806,700 penalty against BlueCrest and required it to redress an estimated US$700 million to its investors under section 55L FSMA.

BlueCrest challenged this decision and took its case to the Upper Tribunal. BlueCrest argued that the FCA was not permitted to impose a redress on a single firm under section 55L FSMA without taking into account the four conditions under section 404F(7) FSMA, being loss, causation,

Compensation Under GDPR Only For Damage Actually Incurred

by Tobias Meyer, Thomas Hauss and Matthias Distler | Aug 9, 2024 | Court Judgment, Regulatory/Compliance

On January 25, 2024 (Case C-687/21), the European Court of Justice ruled in a continuation of its previous data protection case law that a claim for damages based on Art. 82 GDPR does not have a punitive function, but merely a compensatory function. The ECJ thus concludes that a claim for damages always requires the claimant to have suffered concrete damage. A purely hypothetical risk of misuse of data is not sufficient.

Corporate Compliance: A Ruling from the Court of Milan Further Clarifies How to Prevent Corporate Criminal Liability in Case of Directors’ Criminal Violations

by Fabio Cozzi | Jun 3, 2024 | Regulatory/Compliance, Italy

The Italian Supreme Court recently stated that the director’s criminal liability cannot automatically trigger the recognition of corporate criminal liability, as company’s organizational fault must be specifically demonstrated by the Public Prosecutor.[1] Now, the Court of Milan[2] specifically clarifies how an appropriate and effective Organization, Management and Control Model (Model 231) pursuant to Italian Legislative Decree 231/01 (Decree 231) can shield the company from corporate criminal liability.

On January 25, 2024, the Court of Milan convicted the senior managers of an Italian joint-stock company (owned by a foreign-based multinational company) for false corporate communications, pursuant to Article 2621 of the Italian Civil Code (ICC), which provides the criminal liability of directors, general managers, managers in charge of preparing corporate accounting documents, auditors and liquidators when they represent false material facts or they omit material facts whose disclosure is required by law concerning the economic or financial situation of the company or the group.

The Court’s Overview of the Preconditions for Corporate Liability for Criminal Violations

In addition to the analysis of the liability of natural persons, the Court of Milan examined the legal requirements for the company to be deemed liable for crimes committed by

New Government Bill to Reverse Supreme Court’s Decision on Litigation Funding

by Jack Thorne, Briana Walley, Harry Denlegh-Maxwell and James Dobias | Mar 27, 2024 | Legislative Update, Regulatory/Compliance, Transportation & Logistics, United Kingdom

The Litigation Funding Agreements (Enforceability) Bill was introduced to Parliament this week, following the UK government’s announcement earlier this month that it would introduce legislation that would reverse the outcome of the UK Supreme Court’s recent decision in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others.[1]

In PACCAR, a part of the well-known “Trucks” litigation in the Competition Appeal Tribunal (CAT), the Supreme Court held that litigation funding agreements (LFAs) that entitle funders to be paid a portion of any damages recovered (as opposed to a multiple of the investment made by the litigation funder) are “damages-based agreements” (DBAs), as defined in the Courts and Legal Services Act, and were therefore unenforceable unless they complied with the relevant regulatory regime (DBA Regulations 2013).

The ruling in PACCAR was set to have significant ramifications for litigation funders, claimants and claimant law firms in the UK which rely on third-party funding, potentially threatening the financial viability of swathes of the litigation funding industry. Typically, LFAs have been structured as the greater of a multiple of monies invested by the funder and a percentage of damages recovered. This percentage element is

Clearview AI Inc Overturns Regulatory Intervention at First Instance

by Jack Thorne, Pilar Arzuaga and Jonathan Robb | Feb 14, 2024 | Court Judgment, Regulatory/Compliance, Technology, United Kingdom

Clearview AI Inc.’s facial recognition technology has been subject to regulatory scrutiny from the privacy sector worldwide, including the UK Information Commissioner who issued the US company with monetary penalty and enforcement notices (the Notices) for alleged violations of GDPR/UK GDPR (the Regulations).

In a judgment dated October 17, 2023 (the Judgment), the UK’s First-tier Tribunal (FTT) (being the first level of regulatory appeals) upheld, on jurisdictional grounds, Clearview’s appeal of the Notices. The Commissioner sought permission to appeal on November 17, 2023. This blog piece is a reduced version of our wider commentary on the case, which is available here.

Background

Clearview is a US company providing facial recognition services to criminal law enforcement and national security agencies (and/or their contractors) outside of the United Kingdom and the European Union. In short, Clearview collects publicly available images of faces from the internet, which are compiled into a database (the Database). Clearview’s software then creates a mathematical ‘vector’ of those faces, such that they can be indexed and searched against. Clearview’s clients are able to upload their own images onto their private Clearview platform and compare those images against the Database. Clearview’s algorithmic software will return images of sufficient

The Potentially Damaging Effects of Non-Compliance with PD57AC

Court of Appeal Rules in Favour of the FCA in Significant Redress Decision for all Regulated Firms

Compensation Under GDPR Only For Damage Actually Incurred

Corporate Compliance: A Ruling from the Court of Milan Further Clarifies How to Prevent Corporate Criminal Liability in Case of Directors’ Criminal Violations

New Government Bill to Reverse Supreme Court’s Decision on Litigation Funding

Clearview AI Inc Overturns Regulatory Intervention at First Instance

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