www.brownrudnick.com SUIT bulletin STRONG STRONG International Disputes November 2012 REGULATORY NEWS AND CASE UPDATES FROM BROWN RUDNICK’S INTERNATIONAL LITIGATION AND ARBITRATION PRACTICE IN THIS ISSUE NEWS NEWS n Brown Rudnick Expands its Global White Collar Brown Rudnick Expands its Global White Collar Defense & Government Investigations Practice Defense & Government Investigations Practice n Brown Rudnick Files Goldman Claim on Behalf Brown Rudnick LLP is pleased to announce that Mark Beardsworth has joined of Dutch Pension Fund the firm as a partner in the London office. Mark focuses his practice in the defense n Brown Rudnick Hosts Conference in Tunisia: of serious fraud and criminal matters, with expertise in prosecutions brought 4-5 October 2012 by the Serious Fraud Office, the Financial Services Authority and HM Revenue and Customs. These cases are often complex, high profile and international in REGULatORY & LEGISLatiVE scope. Mark undertakes investigations for companies, institutions and on behalf DEVELOPMENTS of regulators. He also advises companies and their directors in a wide range of n Redress for mis-sold Swaps, but only if you’re corporate, regulatory and compliance matters, as well as individuals facing criminal “unsophisticated” and professional disciplinary proceedings. He writes and speaks regularly, both in the UK and abroad. Mark joins the firm at the same time as Thomas A. Ferrigno, n The UK Bribery Act : One Year On who will be based in the firm’s Washington D.C. office. n First Whistleblower Award Leaves More Questions than Answers “We are delighted to welcome Tom and Mark to our Firm,” said Joseph F. Ryan, Chairman and Chief Executive Officer of Brown Rudnick. “With the addition of CASE Law these two highly regarded attorneys Brown Rudnick continues to deepen our n Dramatic Development in Eurozone Bank international bench strength in the areas of white collar defense and government Restructuring investigations. We are committed to providing our clients across the globe with top tier talent and expertise.” n Ukrainian Court Recognises English Court Freezing Order “As our clients continue to face heightened scrutiny by government authorities in n EU Cross-Border Enforcement of Judgments the United States, the UK, and elsewhere, these two accomplished attorneys are in Default: A Note of Caution valuable additions to our team,” added Mark H. Tuohey III, head of the Firm’s White Collar & Government Investigations Practice. “We are very pleased to welcome n Executing Judgments Against Sovereign Assets: Tom and Mark as we look to the Don’t Look Back continued expansion of our global footprint in this practice area.” MENA CORNER – NEWS FROM THE MIDDLE EAST AND NOrtH AFrica “I am delighted to be joining n Dubai Land Department to Open New Arbitration Brown Rudnick,” added Mark Centre for Real Estate Disputes Beardsworth. “The Firm offers n Real Estate Arbitration Award Not Enforced in me an excellent platform to Dubai on Grounds of Public Policy continue building my practice internationally.” n New Saudi Arabian Arbitration Law Mark Beardsworth Tom Ferrigno 1 Attorney Advertising bulletin Brown Rudnick Files Goldman Claim experts from North Africa. Mark Dorff, Partner at Brown Rudnick and Chairman of the Law Firm Network commented, “We are on Behalf of Dutch Pension Fund pleased to have the opportunity to be in Tunis and to be part of On 9 July 2012, acting on behalf of the Dutch pension fund Pensio- the emerging economic development in the region.” enfonds Vervoer and two related parties, Brown Rudnick filed a 250 million professional negligence claim against Goldman Sachs Asset Management International (“GSAMI”). The claim focuses on GSAMI’s mandate as a fiduciary investment manager during the period 2006- 2010, and has two distinct elements arising from GSAMI’s conduct of investments in separate asset classes. The first part of the claim relates to losses suffered in a planned investment in European Government Bonds which was effected through the use of an inappropriately risky portable alpha structure in 2007; and the second seeks to recover losses incurred as a consequence of GSAMI’s flawed implementation of an investment in Global High Yield Bonds in 2009. GSAMI’s defence is currently expected towards the end of 2012, with the still to be agreed trial timetable likely to take this highly complex matter well into 2014. The second day, organized by Brown Rudnick in conjunction with the International Chamber of Commerce, focused on dispute Brown Rudnick Hosts Conference in Tunisia: resolution in the region. There was discussion of a broad range of 4-5 October 2012 topics, including the 2012 ICC Rules of Arbitration, expropriation of assets, asset-tracing and recovery, and alternative dispute resolution. A large contingent from the Brown Rudnick litigation and arbitra- Commenting on the event, Nicholas Tse, Partner, Brown Rudnick tion team, along with members of the corporate team, recently noted “We are delighted to have been able to work together travelled to Tunisia for a 2-day conference jointly organized with the with the ICC to put on a conference which has attracted interest International Chamber of Commerce, the Tunisian Bar and the Law from across North Africa, and which deservedly puts the future of Firm Network. international dispute resolution in this region in the spotlight.” In addition to the conference, members of the team also met with representatives of the Tunisian bar for a round table discussion on the presence of international law firms in Tunisia entitled “compe- tition or collaboration?” as well as for a football match. In respect of the latter event, the team can confirm that none of its members has plans to give up the day job, having been soundly beaten by a skilled Tunisian side, who nevertheless graciously allowed the Brown Rudnick team to hold the trophy! The first day entitled “North Africa in Focus - The View from Tunisia” was jointly hosted with the Law Firm Network and was made up of a series of panel discussions on issues such as legal capacity building after the Arab Spring, the challenges currently facing investors in the region, and recent developments in dispute resolution. Speakers and Panelists included His Excellency the British Ambassador to Tunisia, Christopher O’Connor, His Excel- lency the Governor of the Central Bank of Tunisia, a representative from the African Legal Support Facility and other prominent 2 bulletin REGULATORY & LEGISLATIVE Specifically, for all sales since December 2001 to customers categorised as either “private customers” (in respect of sales made DEVELOPMENTS by the Firms on or before 31 October 2007) or “retail clients” (in respect of sales made by the Firms on or after 1 November 2007), the banks will: (a) provide appropriate redress on the basis of what Redress for Mis-Sold Swaps, is fair and reasonable (in the circumstances) to “non-sophisticated” But Only If You’re “Unsophisticated” customers who were sold structured collars; (b) review sales of other interest rate hedging products (except caps and structured In recent months the Financial Services Authority (“FSA”) has collars) for “non-sophisticated”’ customers, and where it is consid- issued various statements in respect of its on-going consideration ered appropriate provide redress on the basis of what is fair and of the previously widespread marketing and sale of interest rate reasonable (in the circumstances); and (c) review the sale of caps if hedges and swaps to small and medium sized businesses (in all a complaint is made by a “non-sophisticated” customer, and where around 28,000 such products were sold in the past decade or so). it is considered appropriate provide redress on the basis of what is Whilst the FSA accepted that the types of products that were sold fair and reasonable (in the circumstances). As a form of safeguard (swaps, caps, collars and structured collars) were not inherently the exercise undertaken by each bank will be scrutinised by an inappropriate, and of course not all will have been mis-sold, it does independent reviewer and overseen by the FSA. In addition to take the view that such products were often not appropriate for the key market players the FSA intends to contact all other banks so-called “unsophisticated” customers and it has found “serious that may have sold such products with a view to agreeing a similar failings” in the actions of some of the largest names in retail banking: exercise with them. Barclays, HSBC, Lloyds and RBS. The identified failures included: (i) a lack of information and disclosure of the costs for exiting a product; Notwithstanding the FSA’s efforts, a major concern for many is (ii) a failure to ascertain the extent of customers’ understanding of that given the applicable criteria to qualify as an “unsophisticated” the risks of the products being offered; (iii) sales that strayed into customer many affected corporate claimants will be excluded. the realms of advised sales; (iv) incentives to bank employees for Under the FSA proposals only corporate claimants that meet at driving sales; and (v) disproportionately lengthy terms of the hedging least two of three qualifications are covered by the agreement, products which far exceeded that of the underlying loan or product namely: turnover not exceeding £6.5m; a balance sheet of no more which was the target interest rate being hedged. than £3.26m; or having less than 50 staff. The other concern is that banks can also dismiss a complaint where it can “demonstrate” that the customer had the “necessary experience and knowledge to The success of any potential mis-selling understand... [the] complexity and the risks involved”. This gives rise claim will therefore depend very much to a concern that notwithstanding the arguably good intentions of the FSA, the banks will still have a great deal of discretion when it on skillful litigators teasing out the facts comes to deciding whether or not to pay any redress.