SFO investigation into quartet of banks halted

Clifford Chance, SNR Denton, Allen & Overy and Simmons & Simmons have halted a bid by the Serious Fraud Office (SFO) and the Home Secretary Theresa May to seize documents relating to an Italian criminal investigation into four banks, including JP Morgan Chase Bank National Association (http://www.bailii.org/ew/cases/EWHC/Admin/2012/1674.html).

Matrix Chambers’ Julian Knowles QC was instructed to lead the challenge by Clifford Chance partner Matthew Newick for JP Morgan. SNR Denton partner Richard Caird acted for Depfa Bank and Allen & Overy partner Arnondo Chakrabarti acted for Deutsche Bank. Hugo Keith QC of Three Raymond Buildings supported the challenge instructed by Simmons partner Nick Benwell.

Responding, the Treasury Solicitor instructed 11 KBW’s Nigel Giffin QC for the SFO and the Home Secretary.

At the centre of the dispute was a request made by Milan-based prosecutors from the UK for information from the four banks over a derivatives deal. The banks are alleged to have earned more than €100m in secret commissions from a deal to restructure Milan’s €1.7bn debt through a swaps structure.

Such a deal, it was alleged, would be contrary to Italian law and, consequently, meant that the banks had “fraudulently deprived” Milan of the required protections available to it under English financial services legislation. The allegations of fraud are denied.

A request by the Italian authorities for the SFO to intervene and seize documents relating to the case in Italy. The banks sought to challenge the intervention by arguing that the SFO did not have jurisdiction to intervene.

According to the judgment Knowles argued: “The LOR [Letter of Request] was not confined to a mere request for the voluntary production of documents; it included requests for interviews and court orders. The LOR was thus coercive, not voluntary.”

Ruling, Lord Justice Gross agreed: “It is with considerable reluctance that I have come to the conclusion that assistance should not be given in this case in response to the LOR.”

The legal line up:

For the claimants (1) JP Morgan Chase Bank National Association

Matrix Chambers’ Julian Knowles QC to lead Louis Mably of 6 King’s Bench Walk instructed by Clifford Chance partner  Matthew Newick

(2) Depfa Bank Plc

Matrix Chambers’ Julian Knowles QC to lead Louis Mably of 6 King’s Bench Walk instructed by SNR Denton partner Richard Caird and senior associate Thomas Leyland

(3) UBS Ltd

Three Raymond Buildings’ Hugo Keith QC instructed by Simmons partner Nick Benwell

(4) Deutsche Bank AG

Matrix Chambers’ Julian Knowles QC to lead Louis Mably of 6 King’s Bench Walk instructed by Allen & Overy partner Arnondo Chakrabarti

For the defendants (1) The Director of the Serious Fraud Office; (2) The Secretary of State for the Home Department

11 KBW’s Nigel Giffin QC to lead Duncan Atkinson of 6 King’s Bench Walk instructed by The Treasury Solicitor

For the interested party the Public Prosecutor of Milan

McNair Chambers’ Khawar Qureshi QC instructed by Quinn Emanuel Urquhart & Sullivan