•  Application 11717-2017
  • Hearing 6 November 2017
  • Reasons 10 November 2017

The SDT ordered that the second respondent should pay a fine of £500,000. Locke Lord was an international law firm primarily based in the USA. The second respondent was the Law Society-registered entity incorporating the London office. The matter was dealt with by way of the agreed outcome procedure. The first respondent did not attend the hearing, but there was no prejudice to him in the SDT proceeding to consider the proposed agreed outcome.

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 interests, thereby breaching principles 4 and 8 and outcomes 0(3.1) and 0(3.2) of the SRA Code of Conduct 2011.

It had failed properly to supervise the matters relating to I Ltd and S Ltd which had been conducted by the first respondent after (i) having become aware of concerns as to the probity of transactions involving the first respondent in March 2013, May 2013 and January 2014; (ii) having identified a potential conflict of interest affecting the first respondent in or about July 2014; and (iii) having caused the first respondent to be placed on ‘gardening leave’ in July 2015, in breach of principles 6 and 8.  

The SDT had reviewed all the material before it and was satisfied beyond reasonable doubt that the second respondent’s admissions had been properly made.

The second respondent was ordered to pay costs of £25,000 plus VAT.