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SEC fine and UK regulatory burden spark massive investment in legal function
Asset management company Invesco UK is to double its in-house legal expertise following the $450m (£249.5m) fine imposed on its parent company Amvescap by the Securities and Exchange Commission for improper trading.
The revelation coincides with claims that the wider UK financial services industry is also being forced to beef up its legal input to meet the increasing regulatory burden imposed by the Financial Services Authority (FSA).
As revealed by The Lawyer (27 September), the FSA expects to increase its external legal spend on enforcement again next year after already more than doubling its external enforcement budget to £5m for the 2004-05 financial year.
Invesco UK head of legal Michelle Moran, who was promoted to the position in August, said the company was looking to recruit three in-house lawyers in the UK, including two senior fund management specialists, within the next couple of months. Further appointments are scheduled in Europe and Ireland later in the year.
Invesco UK is a subsidiary of the global asset management group Amvescap, which was fined by the US regulators earlier in the month for improper trading in mutual funds, the US equivalent of UK unit trusts.
The $450m fine related to claims that, from 2001 until July 2003, the company permitted selected investors to make rapid trades in and out of certain Invesco funds at the expense of other longer-term investors.
A spokesman said the company was now rolling out more structured risk management procedures and adding “additional resources in both legal and compliance” globally.
As deputy general counsel for Amvescap and head of legal for Invesco outside North America, John Taylor’s responsibilities have also been expanded to include overseeing the company’s compliance teams outside the US. Taylor expects to recruit into the 17-strong UK compliance team next year.
Legal & General global head of legal Geoffrey Timms said the majority of financial service providers have had to make similar increases to both their external and internal legal spends over the last five years to meet the increasing regulatory burden from the FSA.
“The sheer weight of regulation, the speed of regulation change and the heightening of corporate governance has meant the need for legal and compliance input is increasing,” said Timms. “Our legal and compliance staffing levels have substantially increased.”