Stephenson Harwood and Freshfields advise on Prudential's £30m FSA fine
Stephenson Harwood and Freshfields Bruckhaus Deringer picked up lead advisory roles as Prudential was last week fined £30m by the Financial Services Authority (FSA) over its attempt to take over Asian rival AIA in 2010. The FSA, which was this week replaced by the Financial Conduct Authority and the Prudential Regulation Authority, fined Prudential and censured its chief executive Tidjane Thiam, for failing to inform the FSA at the appropriate time about its $35.5bn (£23.5bn) bid - breaching FSA principles and UKLA listing principles.
April 02, 2013 at 06:16 AM
3 minute read
Stephenson Harwood and Freshfields Bruckhaus Deringer picked up lead advisory roles as Prudential was last week fined £30m by the Financial Services Authority (FSA) over its attempt to take over Asian rival AIA in 2010.
The FSA, which was this week replaced by the Financial Conduct Authority and the Prudential Regulation Authority, fined Prudential and censured its chief executive Tidjane Thiam, for failing to inform the FSA at the appropriate time about its $35.5bn (£23.5bn) bid – breaching FSA principles and UKLA listing principles.
Prudential turned to Freshfields' head of financial institutions disputes David Scott for advice, while Stephenson Harwood's team, comprising commercial litigation partner Tony Woodcock and associate Harvey Dyson, acted for Thiam.
Scott said: "The application of the FSA's general principles and the listing principles is difficult to predict and is a matter of judgement. In this case, the FSA accepted that the board of Prudential exercised its judgement in good faith, but nevertheless sanctioned Prudential and censured its CEO.
"The FSA's decision has not clarified precisely when firms are required to approach the FSA and UKLA in relation to potential corporate acquisitions, and boards will continue to have to exercise their judgement in this area."
The FSA did not seek external counsel. Slaughter and May, which advised Prudential on its failed bid to acquire the Asian subsidiary of US insurer AIG, was on hand to deal with any enquiries but did not have an advisory role.
The FSA said: "Prudential failed to deal with the FSA in an open and cooperative manner when it was seeking to acquire AIA in early 2010, because it did not inform the FSA of the proposed acquisition until after it had been leaked to the media on 27 February 2010. [Thiam] played a significant role, with others, in the decision not to contact the FSA about the proposed acquisition. Therefore, he was knowingly concerned in this breach. In censuring him, the FSA made no finding of lack of fitness and propriety in relation to Tidjane Thiam."
Prudential Chair Paul Manduca said: "The FSA has determined that it should have been informed earlier about the fact we were contemplating the AIA transaction and we regret, with hindsight, not [doing so]."
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