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When the Regulator Calls…



Deborah B

Deborah Blaxell, Legal Consultant, Epiq Systems

Deborah BCompanies face requests for information both from local and overseas courts and regulators. Supervision and enforcement teams within national regulators are collaborating and the cross over between regulatory investigations and litigation is growing. Moreover, organisations are increasingly required to respond to multiple prosecutions of the same wrongdoing by different government agencies, foreign regulators and private plaintiffs.
No commercial sector is immune from regulatory investigation, but recent scandals relating specifically to the banking and finance industries have thrown particular attention on companies in these sectors. In December 2012, the Financial Services Authority (FSA) imposed its largest ever fine on UBS following misconduct relating to LIBOR and EURIBOR. Large fines were also imposed upon JPMorgan Chase & Co. which faced a £33.3 million penalty in 2010 for not separating client money from the firm’s accounts suitably . In addition, in the same year Goldman Sachs Group Inc., London, was fined £17.5 million for failing to notify the FSA about a U.S. Securities and Exchange Commission investigation.

In a constantly evolving panorama of national and international regulation and legislation, businesses, supported by their legal counsel, need to keep abreast of, and comply with, a complex range of rules and laws. Being able to locate key information is critical when responding to investigatory queries or deciding whether or not to self report. Failure to do so can expose businesses to hefty fines, penalties and damage to the corporate reputation.
In order to understand the extent to which U.S. and European businesses are e-Disclosure ready for possible investigation by regulatory authorities or the commencement of legal proceedings, in 2012 Epiq commissioned research amongst approximately 2,000 firms in the UK, USA, France and Germany.

The results show that over half of corporations (58%) across the US and the key economies of Europe do not believe that they have rapid and accurate access to key documents should a regulator make an inspection. Companies in Germany are most confident about being able to produce the relevant documents rapidly (47% not capable), followed by the USA (56% not capable) and UK firms (59% not capable). French firms were the least confident, with 69% of corporations declaring that the majority of companies in their sector would not be able to access all the key information and types of document demanded by the regulator during the course of an investigation.

The 2,000 firms surveyed were drawn from 17 different sectors including manufacturing, aerospace and media and publishing. By examining the data relating to each industry it is clear that despite being highly regulated, respondents from both the banking and financial services sectors exhibit little confidence in the industry’s e-Disclosure readiness. 64% of those surveyed from the banking sector said that the majority of companies within their industry would be unable to access the key information demanded by a regulator. This was a sentiment echoed by 59% of financial services companies when assessing the e-Disclosure readiness of financial services providers.

Of the 17 sectors, banking ranked 5th with only the media and publishing, high-tech and information technology, telecoms and aerospace showing a higher proportion of respondents displaying a lack of confidence in their sector’s e-Disclosure capabilities (74%, 69%, 68% and 68% respectively). The financial services served a little better ranking 13th – although even here well over half (59%) of the respondents suggest that the industry is poorly equipped for investigation. Since this evidence was gathered before many of the 2012 scandals – including LIBOR and the mis-selling of PPI – it must be hoped that these experiences have prompted businesses to look to improve their e-Disclosure readiness.

Indeed, proactive measures will allow companies to respond effectively if they either suspect that wrongdoing has occurred and wish to conduct internal investigations as a precursor to self-reporting or if they are faced with a regulatory request for information.
An important part of this preparation is ensuring that the company has the ability to monitor a wide range of activities, undertaken by numerous individual staff members, who will often be located in several jurisdictions, and who will be using a variety of information management systems and other communication tools. A data map providing up to date information about how the business communicates with its contacts and where and how the information is stored will be essential to complying with the relevant legislation and regulations, and avoiding or reducing judicial or regulatory criticism.

As well as monitoring communications, it’s also important that companies have the ability to search and review the information for high risk communications using the most up-to-date and appropriate technologies available. While traditionally, this has been achieved by lawyers conducting linear document reviews, the increase in the volume of potentially relevant data calls for a more effective means of managing the amount of data which is presented to the review team.
For example, companies may benefit from the application of key word searches to particular document populations. They may also benefit from the ability to group together similar documents from very large document sets, to be appraised, on an on-going basis, of potential breaches. If wrongdoing is suspected, or regulators have commenced an investigation, and large document sets need to be reviewed, speed in the response will be vital. Technology which is able to rank or prioritise data in accordance with decisions made at the outset by a senior reviewer, and thereafter promote those documents which are most likely to be relevant to an investigation to the front of the review queue, will be invaluable in accelerating a response.

In addition, costs may be reduced if those managing the disclosure exercise are able to gain an early appreciation of the nature of the data, and are able to assess what is likely to be relevant to the investigation and what can safely be removed from the data set prior to review.

The introduction of new far-reaching legislation and the advent of more aggressive cross border enforcement activity make it more important than ever for companies to be prepared to respond to any request for information rapidly, efficiently and cost effectively. This can only be achieved if technology is introduced at an early stage and a more creative approach to the document review process is adopted, inserting outsourced resources where appropriate to tackle the increasing costs challenge.

Robust systems for capturing, categorising and retrieving key documents and data are necessary to ensure that information is rapidly retrievable. An investment in this area can prove beneficial on many fronts as systems can easily be adapted for different legislative or regulatory requirements. The research shows that companies within the banking and finance industries recognise their shortcomings in this area. However, it must be hoped the recent spate of investigations and fines will have prompted greater attention to be directed to e-Disclosure readiness.

To read the full report, visit Epiq’s web site:




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OPEC+ to weigh modest oil output boost at meeting – sources



OPEC+ to weigh modest oil output boost at meeting - sources 1

By Ahmad Ghaddar, Alex Lawler and Olesya Astakhova

LONDON/MOSCOW (Reuters) – OPEC+ oil producers will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, cut output by a record 9.7 million bpd last year as demand collapsed due to the pandemic. As of February, it is still withholding 7.125 million bpd, about 7% of world demand.

In January OPEC+ slowed the pace of a planned output increase to match weaker-than-expected demand due to continued coronavirus lockdowns. Saudi Arabia made extra voluntary cuts for February and March.

Three OPEC+ sources said an output increase of 500,000 barrels per day from April looked possible without building up inventories, although updated supply and demand balances that ministers will consider at their March 4 meeting will determine their decision.

“The oil price is definitely high and the market needs more oil to cool the prices down,” one of the OPEC+ sources said. “A 500,000 bpd increase from April is an option – looks like a good one.”

A rally in prices towards $67 a barrel, the highest since January 2020, the rollout of vaccines and economic recovery hopes have boosted confidence the market could take more oil. India, the world’s third biggest oil importer, has urged OPEC+ to ease production cuts.

Saudi Arabia’s voluntary cut of 1 million barrels per day (bpd) ends next month. While Riyadh hasn’t shared its plans beyond March, expectations in the group are growing that Saudi Arabia will bring back the supply from April, perhaps gradually.

Some OPEC+ members also anticipate that the Saudis will be willing to ease cuts further, but it was not clear if they had had direct communication with Riyadh.

Saudi Arabia has warned producers to be “extremely cautious” and some OPEC members are wary of renewed demand setbacks. One OPEC country source said a full return of the Saudi barrels in April would mean the rest of OPEC+ should not pump more yet.

“The Saudi voluntary cut will be back to the market,” the source said. “I’m personally with no more relaxation, not until June.”

Russia, one of the OPEC+ countries which was allowed to boost output in February, is keen to raise supply and a source last week said Moscow would propose adding more oil if nothing changed before the March 4 virtual meeting.

(Additional reporting by Rania El Gamal and Nidhi Verma; Editing by Elaine Hardcastle)


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UK’s Sunak to build bridge to recovery with more spending



UK's Sunak to build bridge to recovery with more spending 2

By William Schomberg

LONDON (Reuters) – British finance minister Rishi Sunak will next week promise yet more spending to prop up the economy during what he hopes will be the last phase of lockdown, but he will also probably signal tax rises ahead to plug the huge hole in the public finances.

Sunak, who is due to announce a new budget plan on March 3, has already racked up more than 280 billion pounds ($397 billion) in coronavirus spending and tax cuts, pushing Britain’s borrowing to a peacetime record.

Prime Minister Boris Johnson plans to lift England’s current lockdown entirely only in late June so Sunak is expected to rely heavily on the debt markets again.

His job retention scheme, paying 80% of employees’ wages, will probably be extended beyond a scheduled April 30 expiry date, further inflating its estimated cost of 70 billion pounds. Support for the self-employed looks set to stay too.

Businesses are demanding Sunak keep other lifelines, such as exempting the firms hardest hit by the lockdown from property taxes and giving them a value-added tax cut.

And calls are growing for an extension of a 20 pounds-a-week emergency welfare increase due to expire in April.

The Times newspaper said Sunak would prolong his stamp duty property tax break for three months until the end of June.

Sunak hopes that by then Britain will be emerging from its deep freeze thanks to Europe’s fastest vaccination programme.

Bank of England Chief Economist Andy Haldane likens the economy to a “coiled spring” primed with the savings that households have built up after being stuck at home.

A strong recovery would mean a jump in tax revenues, doing some of the Treasury’s job of fixing the public finances.

Rupert Harrison, an aide to former finance minister George Osborne, said Sunak should not try to slash Britain’s 2.1 trillion-pound debt mountain, equivalent to 98% of GDP – a ratio unthinkable for decades.

Instead he should write new budget rules tied to the cost of debt servicing, which is close to record lows.

“We can safely carry higher levels of debt than before,” Harrison told a webinar organised by Onward, a think-tank.

But the scale of Britain’s borrowing is raising questions about how long Sunak and Johnson can stick to their promises not to raise key taxes, made to voters before the 2019 election.


The huge costs of tackling the worst of the coronavirus pandemic are likely to ease in the months ahead, meaning this year’s 400 billion pound budget deficit should narrow.

But Britain is probably on course to be stuck with a gap of 60 billion pounds between revenues and day-to-day spending by the mid-2020s, the Institute for Fiscal Studies think-tank says.

In a nod to that, Sunak is expected to start raising Britain’s low corporation tax rate.

The Sunday Times said the rate would rise steadily to bring in an extra 12 billion pounds a year by the time of the next election, due in 2024.

Other options include ending a freeze on fuel duty increases which has been in place since 2012 and looks at odds with Britain’s plans to be carbon net zero by 2050.

But higher fuel prices now would hurt the haulage industry, already struggling with Brexit-related disruption, and could alienate working-class voters who backed Johnson in 2019.

Higher capital gains tax or lower pension incentives would anger lawmakers in Johnson’s Conservative Party.

David Gauke, a former deputy finance minister, said the only big revenue-raising options were the ones that Johnson has promised not to touch – income tax, VAT and national insurance contributions.

“In the end, they are going to have to say, sorry we just can’t responsibly maintain that manifesto commitment,” Gauke told the Onward webinar.

($1 = 0.7046 pounds)

(Writing by William Schomberg; Editing by Catherine Evans)


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Women inch towards equal legal rights despite COVID-19 risks, World Bank says



Women inch towards equal legal rights despite COVID-19 risks, World Bank says 3

By Sonia Elks

(Thomson Reuters Foundation) – Women gained legal rights in nearly 30 countries last year despite disruption due to COVID-19, but governments must do more to ease the disproportionate burden shouldered by women during the pandemic, the World Bank said on Tuesday.

Nations should prioritise gender equality in economic recovery efforts, the bank said, warning that progress on equal rights was threatened by heavier job losses in female-dominated sectors, increased childcare and a surge in domestic violence.

“This pandemic has exacerbated existing inequalities that disadvantage girls and women,” David Malpass, World Bank Group president, said in a statement accompanying the annual “Women, Business and the Law” report.

“Women should have the same access to finance and the same rights to inheritance as men and must be at the centre of our efforts toward an inclusive and resilient recovery from the COVID-19 pandemic.”

A total of 27 countries reformed laws or regulations to give women more economic equality with men in 2019-20, said the report, which grades 190 nations on laws and regulations that affect women’s economic opportunities.

While countries in all of the world’s regions made improvements in the new index – with most reforms addressing pay and parenthood, women on average still have only about three quarters of the rights granted to men, the report found.

Notably, nearly 40 countries brought in extra benefit or leave policies to help employees balance their jobs with the extra childcare needs created by coronavirus restrictions.

But such measures were “few and far between” worldwide and will probably not go far enough to tackle the “motherhood penalty” many women face in the workplace, it said.

The report also noted separate data from a United Nations tool tracking gender-sensitive pandemic responses which found 70% of such measures addressed violence, with just 10% targeting women’s economic security.

The pandemic could result in “a backslide on various hard-won advances in women’s rights achieved in recent years”, said Antonia Kirkland, the global lead on legal equality at women’s rights organisation Equality Now.

“This disruption is a unique opportunity for countries to rebuild more resilient, inclusive and prosperous economies,” she told the Thomson Reuters Foundation by email.

“But this can only be achieved alongside the removal of sex discriminatory laws that prevent women from participating fully and equally in economic, social and family life.”

(Reporting by Sonia Elks @soniaelks; Editing by Helen Popper. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit

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