LAWFUEL – The Legal Newswire – Bt Edward Fennell –
It should have been no surprise that the Financial Services Authority (FSA) sounded the alarm last week that “criminal gangs” are cashing in on insider dealing. What may be more significant was that it issued a wake-up call to the financial and legal professionals that the time has come to treat these breaches of the law with the seriousness they deserve.
It is well known that in the UK both the penalties for these offences and the number of prosecutions are much lower than in the United States. Convictions that carry a maximum of five or ten years in the UK could easily be five times heavier in the US. Small wonder that the Americans think we have a slack attitude.
But there are growing signs that this may be changing, as signalled most clearly by the suggestion from John Tiner, the outgoing chief executive of the FSA, that the UK Government should now consider granting the authority formal powers to offer immunity in exchange for hard evidence over cases such as insider dealing.
As a way of getting results, the prospect of immunity has proved effective in the US. That is why Robert Goldspink, the English managing partner of the London office of the US firm Morgan Lewis, welcomed last week’s FSA announcement as a step towards a “zero-tolerance” policy. “The FSA is a responsible regulator,” he says, “and I don’t see this as any kind of extreme reaction. It’s just that the FSA is now responding to the realities of the situation it faces.”
But not all English lawyers see it in quite those terms. Rod Fletcher, of Russell Jones & Walker, is concerned that the adoption of an immunity policy as a way of cracking insider dealing – or, indeed, fraud more generally – may “give a result” but it won’t necessarily deliver justice. “My fear is that it would discourage a full investigation and will, in fact, minimise and shape the investigation. It’s a kind of short cut that may not lead you to those who are the biggest offenders.”