Over recent years, regulators have become increasingly aggressive in pursuing investigations and prosecutions against companies, directors and employees.

Bell Gully has unmatched experience and skills to help our clients to respond to regulatory action, to resolve issues promptly where appropriate, and to defend court action all the way to trial where necessary.

The new regulatory environment

The increased regulatory activity is, in part, a consequence of corporate failures following the global financial crisis. But it also reflects a changing mood. The attitude of the general public, the media, politicians and even the courts has undoubtedly shifted in favour of regulatory action against those involved in actual or perceived corporate wrongdoing.

There are many influences on this new regulatory environment:

  • The reach of the criminal law has been extended to cover areas of corporate activity not previously regarded as criminal. We see this, for example, with changes to the law on insider trading and pending criminalisation of cartel activity and some directors' duties.

  • The growth of "quasi-criminal" sanctions in which the courts can impose very substantial pecuniary penalties based on a civil standard of proof.

  • The imposition of personal liability on directors and executives. An example of this is the law relating to continuous disclosure by listed companies which now allows for penalties to be imposed on a company's directors or management.

  • Restrictions on company indemnities for directors and executives.

  • The development of "whistleblower" regimes which encourage and reward reporting of corporate wrongdoing. These have been particularly prominent in the reporting of cartel activity.

  • A continuing trend for Parliament to confer on regulators ever greater powers to search, seize and interrogate those involved in business. Corporate regulators are now armed with investigative powers far more powerful than those conferred on the Police.

  • The perception of a regulator-friendly judicial climate. Although individual cases are of course decided on their own facts, at a broader level judicial attitudes tend to fluctuate over time and the pendulum is generally perceived to have swung firmly in the pro-regulator direction.

  • Increased resourcing of regulatory authorities.

  • Emboldened by all these influences, a far more self-assured and aggressive approach by the regulators to the use of their statutory powers and a new enthusiasm to bring civil and criminal enforcement action.

All of this creates increased risk for those in business. A regulatory inquiry or prosecution has the potential to be costly and to result in substantial penalties or fines, to distract management from more important tasks, and to inflict lasting reputational harm.