• Application 11642-2017
• Hearing 9-13 October 2017
• Reasons 1 November 2017
The SDT ordered that the second respondent (the Law Society-registered entity incorporating the London office of an international law firm primarily based in the US) should pay a fine of £500,000.
The matter was dealt with by the agreed outcome procedure in respect of the second respondent, in the absence of the first respondent.
The second respondent had failed to prevent the first respondent from involving himself (and holding out the firm as being involved in) and using the firm’s client account in transactions that bore the hallmarks of dubious financial arrangements or investment schemes in breach of principles 2, 4, 6 and 8 of the SRA Principles 2011.
It had failed to prevent the first respondent from directing or requesting payments into, and transfers or withdrawals from, the firm’s client account, which were not related to an underlying legal transaction or a service forming part of the firm’s normal regulated activities, in breach of rule 14.5 of the SRA Accounts Rules 2011.
It had failed to have effective systems and controls in place to enable it to identify and assess potential conflicts of interest, in breach of principles 4 and 8 and outcomes O(3.1) and O(3.2) of the SRA Code of Conduct 2011.
It had failed to supervise the matters relating to two clients which had been conducted by the first respondent after:
becoming aware of concerns about a number of transactions involving the first respondent;
identifying a potential conflict of interest; and
causing the first respondent to be placed on ‘gardening leave’ in July 2015, in breach of principles 6 and 8.
The second respondent was ordered to pay costs of £25,000.