RegulationCorporate GovernanceUS watchdog ramps up UK inquiries

US watchdog ramps up UK inquiries

SEC inquiries into UK companies up 23% from last year

The Securities and Exchange
Commission
has increased its examination of UK companies, with 81% of
companies surveyed in 2007 contacted by the regulator as part of an inquiry ­ up
from 23% last year.

The SEC also appears to be targeting smaller and mid-sized companies with a
jump from 18% of this group receiving SEC inquiries in 2006 to 62% in 2007.

Senior finance executives criticised the wave of comment letters from the
SEC, which began surfacing early last year among top-end companies. Lista
Cannon, a partner at Fulbright & Jaworski, who published the figures in
their 2007 Litigation Trends survey, said this was another example of the
extra-territorial reach of the US.

‘It is a natural evolution of the international reach of the financial
markets and the regulators in various jurisdictions, pursuing trans-border
enquiries in order to gain evidence they believe they need for investigations.
It’s a logical evolution,’ she said.
The report also reveals that UK businesses are under increasing pressure to
waive lawyer-client privilege, with 38% of companies having agreed to waive
privilege in the past 12 months to avoid more severe action by enforcement
authorities.

The SEC recently announced an investigation into UK company Smith &
Nephew for possible violations of a law intended to prevent bribery of foreign
officials.

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