“Accounting firm EY calls off ‘Project Everest’ to break up firm” —

• “Accounting firm EY has called off its plan to break up its auditing and consulting divisions. The firm, formally known as Ernst & Young, announced it was ‘stopping work on the project’ because its US arm decided to not to move forward.”
• “The plan came as regulators called for major industry reforms over conflicts of interest and poor working practices.”
• “EY’s announcement ends a year-long battle to build internal support to split the units.”
• “‘We acknowledge the challenges with separating some of our businesses that have the deepest technical expertise in a way that gives both organisations the capabilities they need to compete in the market effectively,’ according to an internal note seen by the BBC.”
• “Financial supervisory bodies in the US, UK and Europe have raised concerns about large accounting firms, claiming they cannot fairly serve as an auditor of clients who also use their consultancy services.”
• “The project cost the firm more than $100m (£80.3m) according to the Wall Street Journal.”

“SEC fines Corvex Management $1M for SPACs conflicts” —

• “New York-based investment adviser Corvex Management agreed to pay $1 million to settle allegations it failed to disclose personnel ownership in certain sponsors of special purpose acquisition companies (SPACs) and didn’t have policies and procedures reasonably designed to thwart conflicts of interest.”
• “Between 2020 and 2021, unnamed Corvex personnel were involved in the formation of three SPACs and shared ownership of the SPACs’ sponsors, according to the SEC’s order.”
• “Corvex had the power “to make investment decisions on behalf of private funds that Corvex advised, including by causing such private funds to purchase securities … to assist with financing SPAC business combinations,” the order stated. The firm would cause its clients to participate in transactions amounting to $52.5 million, $45 million, and $25 million in connection with the business combinations, according to the SEC.”

“Independence, Conflict and the In House Solicitor” —

• “The SRA has in the past expressed concern that solicitors who represent clients whose business is particularly valuable to their firm can find themselves in a difficult position if the client instructs them to do something which potentially conflicts with their professional obligations. The SRA has therefore reminded the profession of the importance of acting with independence in such situations notwithstanding the obvious tension that this can create especially for solicitors working in an in house legal team where the instructions come from their employer. The possibility for conflict between the commercial needs of the business and the legal adviser’s regulatory obligations will inevitably be even greater.”
• “This issue has been highlighted by a recent thematic review conducted by the SRA of in house legal teams. In its survey the SRA asked over 1200 in house solicitors what the main issues that affected them were and in response 10% said that they felt that they had been forced to compromise their regulatory obligations to meet the needs of the businesses for whom they work.”
• “This is a worrying but arguably not surprising statistic. In times of economic downturn the pressure on businesses necessarily increases and the need to ‘get the deal done’ will likewise increase. Alternatively, if a solicitor is working in house for a business which itself is the subject of scrutiny, there is a risk that they could be asked to suppress information in a way that is again at odds with their regulatory duties. In fact 5% of those who responded to the SRA’s survey said that this had been their experience.”
• “The SRA described the results of its survey as “generally encouraging” but this has provoked an outcry from a number of GCs of large and reputable companies, who have posted their response on social media. These GCs say that the SRA has seriously underestimated the ethical challenges faced on a daily basis by many in house lawyers and has called for measures to be put in place by the Regulator to help to support those who find themselves in such situations.”

“Law Firm Can’t Represent Ex-DLA Piper Atty In Cannabis Row” —

• “A California state appeals court on Tuesday upheld the disqualification of an attorney who used emails his client provided him in a tort dispute over a cannabis company, finding that the emails were improperly acquired since they were protected by spousal privilege.”
• “Following an internal dispute, the owners of Cannaco Research Corp., a Northridge, California-based firm that manufactures and distributes cannabis products, engaged in a legal battle during which company emails between one of the owners, Ann Lawrence Athey, and her husband were given to an attorney, who then used the emails in a related case.”
• “The order noted that the courts cannot police what clients tell their lawyers, but it can police how information given attorneys is obtained. The panel said not to restrict the use of improperly obtained communications would be a breach of the public’s trust in the legal system.”
• “‘To allow continued representation of a client after counsel has been provided with, and then used, improperly obtained confidential information would undermine the public’s trust in the fair administration of justice and the integrity of the bar,’ Second Appellate District Justice Dennis Perluss wrote in the order.”