White Collar & Criminal Law News

INSIGHT: Stronger Transatlantic Cooperation Could Be Boon for DOJ, Ailing U.K. Serious Fraud Office

Dec. 12, 2019, 9:00 AM

The Department of Justice has over the past decade collaborated in several high-profile investigations with the Serious Fraud Office, the agency responsible for investigating and prosecuting complex financial crimes in the United Kingdom. Their work in bringing cases related to the Libor and Euribor rigging scandals was a particularly noteworthy example of transatlantic teamwork. But in recent years, U.S.-U.K. cooperation has, at least to public eyes, leveled off.

The SFO has faced rough headwinds domestically during this period. Its conviction rate has plummeted to 53% in 2018-2019, while the length of time between opening an investigation and filing charges has only lengthened. Lisa Osofsky, the SFO’s director since late 2018, has faced an uphill battle to enhance the agency’s performance, often emphasizing the importance of joint U.S.-U.K. investigations and prosecutions. That seems like a fitting mandate for Osofsky, a dual U.S. and U.K. citizen and former FBI attorney and DOJ prosecutor.

Increasing public U.S.-U.K. cooperation could give the SFO a shot in the arm by leveraging vast foreign law enforcement resources, while maintaining its own internal sovereignty. At the same time, the DOJ would benefit from strengthening its relationship with its strategic U.K. partner, further streamlining its international investigations and prosecutions and giving effect to its recent anti-piling-on policy.

As Osofsky heads into her second year as SFO director, it seems like only a matter of time before joint U.S.-U.K. investigations reach previous heights again.

Joint U.S.-U.K. Partnership Can Build Off of Past Successes

When successful, the benefits of U.S.-U.K. collaboration are evident. In July 2012, the SFO announced an investigation into the offered rate rigging scandals, where bank insiders allegedly conspired to manipulate the London Interbank Offered Rate (Libor) and the European Inter-Bank Offered Rate (Euribor) by submitting inaccurate estimates in an attempt to bend the rates in the direction of their trading positions.

The SFO and DOJ soon began cooperating on parallel investigations which, despite some jurisdictional wrangling and critiques of its outcomes, led to SFO successes: It prosecuted 13 individuals related to Libor rigging and 11 others related to Euribor. Five of the 13 Libor defendants and six of the 11 Euribor defendants pleaded guilty or were convicted at trial.

The DOJ, for its part, pursued high-profile cases arising from these joint efforts, receiving criminal penalties of $2.5 billion, while consistently expressing its appreciation to the SFO for its “cooperation and assistance.”

Certainly, transatlantic cooperation is not a panacea, especially when the outcomes of joint efforts are mixed, as in the Forex rigging scandal, where the SFO declined to pursue any cases and the DOJ did not prevail at trial (although other agencies assessed related penalties and fines).

But as the Libor/Euribor example shows, parallel proceedings can lead both countries to success in highly technical cases that span multiple jurisdictions. They also provide deterrence for parties in both jurisdictions who need to factor double inquiries into their cost-benefit analyses.

Cooperation Is a Two-Way Street

Could Osofsky’s oft-cited goal of increased U.S.-U.K. cooperation make a measurable impact in reducing the SFO’s present challenges? And would this success help U.S. agencies as well? The answers appear to be yes—and yes.

First, greater cooperation with U.S. agencies plainly would inure to the SFO’s benefit. In many ways, U.S. law enforcement agencies are not constrained by the resource limitations that hamper the SFO, whose annual core budget was a mere £52.7 million ($66.6 million).

Leveraging U.S. intelligence and investigative resources seems like a natural solution. In fact, these efforts already appear underway, with the recent “U.S.-U.K. CLOUD (Clarifying Lawful Overseas Use of Data) Act agreement,” whereby U.K. agencies directly can issue warrants for Americans’ data outside the U.S. legal system (or necessarily meeting U.S. Fourth Amendment protections), and vice versa.

In addition, U.S. agencies have a broader jurisdictional reach than the SFO, permitting them to more easily investigate individuals around the globe whose crimes have some nexus with American dollars.

As the U.K. moves toward Brexit, the SFO might find fewer willing investigative partners in the rest of Europe, making the U.S.’s broad reach more attractive. The U.S. also may act as an investigative conduit between U.K. and European agencies, to the extent those relationships deteriorate.

Greater collaboration also would benefit the DOJ and other American law enforcement agencies, like the SEC’s Division of Enforcement. Despite these agencies’ relatively wide jurisdiction, they still need the active cooperation of foreign partners to obtain evidence and bring parties to justice.

One recent example is the DOJ’s reliance upon British assistance in promptly apprehending and later extraditing the U.K. national partially responsible for the May 6, 2010, “Flash Crash.” That individual ultimately was arrested in the U.K. in April 2015, just two months after the DOJ filed its criminal complaint, after which he was extradited (under protest) and pleaded guilty in U.S. federal court in November 2016. He is still awaiting sentencing.

Osofsky’s promise of increased U.K.-U.S. investigations may be more crucial than ever. But a year into her tenure, concrete examples of greater public cooperation remain relatively few and far between—despite the benefits it would bring to an agency working under institutional and resource-based constraints.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Timothy J. Coley is counsel in the Washington, D.C., office of Buckley LLP, where he represents corporate and individual clients in a variety of government investigations and enforcement matters, as well as white collar and class action litigation.

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