1 00118601 Emerging themes 2019 A4 AW v31 combined - Page 14



INVESTIGATIONS
It is, of course, the case that misconduct in a single
jurisdiction – particularly in wholesale financial markets
– can have an effect on markets globally, with
potentially numerous authorities wishing to investigate
the behaviour of individuals based in other countries.
This is exacerbated by the extremely wide approach of
the US authorities to claiming jurisdiction over conduct
elsewhere in the world, for example where the only
physical connection with the US is that payments have
been made in US dollars.
Examples in recent years of multi-jurisdictional
investigations where we have seen conflict between
international regulators include inter-bank offering rate
manipulation, FX manipulation, SSA bond trading
manipulation, misconduct in the aviation insurance
market, commodity trading manipulation and various
cross-border bribery investigations. To complicate
matters further, suspected misconduct in the financial
services sector can also lead to multiple agencies in
each jurisdiction conducting their own parallel
investigations – for example, from regulatory, criminal,
antitrust and data security perspectives.
In multi-authority investigations of this nature, the pinch
points that cause authorities to fall out with one another
are numerous and can be significant in the course
of each body’s own investigation. Each authority
understandably wants to conduct a full investigation
into the suspected misconduct, including access to
the relevant documents, access to the relevant
witnesses and ultimately control of any individuals
who are believed to be culpable. Yet the steps taken by
one authority will frequently undermine or cause other
major problems for parallel authorities investigating the
same matters.
The most serious issues we see include disagreements
on sharing of documentary evidence between
authorities; how, where and by whom individuals will be
interviewed; which authority will prosecute individuals;
the timing of any settlements; the division of financial
penalties imposed; and, ultimately, which authority
should be seen as the ‘lead’ investigator on the case.
While there are numerous formal cooperation
agreements and mutual legal assistance arrangements
in place between authorities in different jurisdictions, we
regularly see authorities seeking to bypass these
arrangements to seek to get access to witnesses in
another jurisdiction. If an overseas body is the first to
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identify and investigate a potential issue, they may be
reluctant to alert the local national authority to the issue
in case that authority then commences its own parallel
investigation which could well delay or interfere with
the initial investigation. As a result, direct contact is
frequently made with witnesses based overseas in the
hope that those individuals will agree to attend an
interview on a voluntary basis. We have even seen US
investigators detaining (but not arresting) individuals
arriving in the US on holiday, and immediately
interviewing them about their Bloomberg chats –
without any access to a lawyer or affording any
other legal protections.
Where authorities do work together to coordinate
interviews, the authority based in the jurisdiction where
the individual is domiciled will typically take the lead in
questioning witnesses, although this in itself can cause
friction between investigating bodies. Similarly, whether
the interview is to be conducted on a compelled basis
(as is typically the case for witnesses in UK regulatory
investigations and by the Serious Fraud Office) or on a
‘voluntary’ basis (where the witness is not legally required
to answer questions if they do not wish to) can be a
deeply contentious issue between the authorities due to
the legal problems that compelled testimony can create
in the US. We saw in 2017 in the context of LIBOR-related
prosecutions that even making transcripts of compelled
interviews available to US prosecutors can taint a
prosecution in the US, leading to prior convictions being
quashed on appeal.
Perhaps the most significant issue that frequently arises
in cross-border criminal investigations is which authority
will bring a prosecution of individuals believed to have
committed offences. Where suspected misconduct
leads to parallel offences in a number of jurisdictions,
it is not open to all authorities to bring prosecutions
against the same individual (in contrast to regulatory
enforcement against firms, where there is no such
restriction). The potential to extradite individuals to face
trial in another country has led to bad blood between
authorities who are each keen to have one or more
individuals within their control. This is at its most acute
where one prosecuting body is seeking cooperation with
the individual as a possible prosecution witness (with the
potential to grant immunity or offer a plea bargain) while
another is proposing to prosecute that individual. The
authorities in the state in which the individual resides will
normally have first option on bringing a prosecution, but
where the individual is based in another jurisdiction there

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