Following on from our recent briefing note on directors conflicts of interest, on 9th September 2013, the Financial Reporting Council (FRC) fined Deloitte LLP £14 million for failing to properly manage conflicts of interest when advising the collapsed carmaker, MG Rover Group. This fine dwarfs the £1.4 million penalty levied against PricewaterhouseCoopers LLP in 2012, for failing to realise that JP Morgan had not been keeping customer money ringfenced from its own. The FRC also banned Maghsoud Einollahi, a former partner at Deloitte, from the industry for three years and fined him £250,000 which Deloitte has committed to paying. The FRC’s executive director for conduct said that the final ruling “should be essential reading for all members of the profession.” He further added that “the sanctions imposed are in line with the FRC’s aim to ensure penalties are proportionate and have the necessary deterrent effect to prevent misconduct and bolster public and market confidence.” Deloitte has contested the tribunal’s main conclusions and said that it could have “negative implications” for the industry. Please contact Christopher Axford, Partner in Druces LLP’s Corporate & Commercial Team for more information.This note does not constitute legal advice but is intended as general guidance only. It is based on the law in force at 11 September 2013.
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