Chris Blackhurst: It’s right that we get tough on economic crime, but we've a lot of catching up to do
Midweek View: In its annual performance report for 2013/4, the UK Financial Conduct Authority disclosed how many prosecutions it had brought in the year for market abuse: one
For the last 30 years, give or take, I’ve been a dutiful attender at the Cambridge International Symposium on Economic Crime.
Now in its 32nd year, the conference is held in the first week of September at Jesus College. I started going because I was lectured in law by the founder, Professor Barry Rider, and we stayed in touch.
Rider stood out among the law dons for me because he managed to make the subject seem real, and therefore interesting. While I was having to attend dry discourses on English legal history or land law and trusts, Rider was teaching company law, and in particular, I remember, insider trading.
Other – snootier – academics mocked him, saying he was far too “commercially oriented”, that some of the aspects he dwelt upon were not worthy of serious intellectual study. One notion occupied them, which was that insider dealing was not really a crime at all, and it had no victim.
Evidence for their argument came from the fact it had only just become an offence in the UK – until 1980, insider trading was perfectly legal.
Rider chose to differ, and regaled us with dark tales of City syndicates profiting from privileged information. The contrast with the US, where insider trading had effectively been barred since 1909, and outlawed by statute since 1934, could not be more marked.
When it came to holding his Symposium that comparison was again highlighted. The first few gatherings were small, attended by only 50 or so law enforcers, fraud investigators and law makers. By far, the ones with the most to say were the Americans. They came en masse from the Justice Department and the New York District Attorney’s office.
They were in a different league from their UK counterparts. Hard-talking, confident, loving the pursuit of felons, they spoke knowledgably of the Mob, of Ponzi schemes and boiler rooms.
Down the years, the conference has grown in size. This year, more than 1,000 delegates from all over the globe will make the trip. Gradually, too, the British presence has increased. So too is the importance attached to the Symposium by the authorities. On Monday night, at the opening dinner, both the Attorney-General, Jeremy Wright, and director of the Serious Fraud Office, David Green, were seated at the top table.
Yesterday morning, Wright and Green made speeches underlining their determination to crack down on fraud. Wright said the Government was considering a new offence, of corporate failure to prevent an economic crime. It would follow similar lines to the crime of failing to prevent bribery in the Bribery Act.
The tough bit of that for any company, apart from the unlimited fine, is that the Bribery Act offence is one of strict liability – so in the case of economic crime a company would be required to prove it had done everything it could to prevent the scam from occurring.
Green highlighted the role of lawyers in trying to block SFO cases. While I do not question the sincerity of Wright and Green, and there’s no doubt that the attitude on high has become firmer, thanks to numerous banking scandals and the need to cut off the funding of terrorists, I do wonder about the British Establishment.
Will it really have shifted so radically in its view from that expressed against Rider? Too many of the products of our supposedly finest schools, it seems to me, are engaged in the sort of work that Green is decrying: advising companies and wealthy individuals on how to avoid getting caught and successfully prosecuted. If only more of them, as in the US, chose to go to the other side.
Even then, I’d still require convincing. We don’t bring enough cases, and when we do, progress is painfully slow (mostly because it’s hampered by the target’s legal team).
On its website, the US Securities and Exchange Commission says that “in recent years the SEC has filed insider trading cases against hundreds of entities and individuals, including financial professionals, hedge fund managers, corporate insiders, attorneys, and others whose illegal tipping or trading has undermined the level playing field that is fundamental to the integrity and fair functioning of the capital markets.”
In its annual performance report for 2013/4, published in July, the UK Financial Conduct Authority disclosed how many prosecutions it had brought in the year for market abuse: one.
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