Christopher Leonard is a member of Bingham's UK financial regulatory practice and leads the non-contentious advisory team. Christopher advises a wide range of international investment manager and broker-dealer clients on all aspects of the financial regulatory framework in the UK and the EU including:
•The UK Financial Services and Markets Act and the rules of the FCA and the PRA.
•EU financial services directives and regulations, including the Market Abuse Directive, the Short Selling Regulation, the Markets in Financial Instruments Directive (MiFID), the Alternative Investment Fund Managers Directive (AIFMD), Undertakings for Collective Investment in Transferable Securities Directive (UCITS), the Transparency Directive, the Capital Adequacy Directive, and the European Markets and Infrastructure Regulation (EMIR); and
•prospective changes to financial services legislation (and, in particular, strategic advice on how to prepare for such changes).
Christopher and his team work closely with clients to advise on all aspects of managing and operating a business within the financial services regulatory framework.
Chambers UKrecognises Christopher for his technical understanding of the rules and regulations...and how those rules can be practically applied.' He is also recognised byLegal 500andIFLR 1000.
Christopher regularly speaks about financial regulatory developments, participates in industry working groups and has contributed a number of articles on regulatory issues to industry periodicals. Christopher's understanding of the role of regulation and compliance within regulated businesses is enhanced by his previous experience as a senior in-house lawyer for an institutional asset manager, his role as compliance officer for Bingham's UK legal practice (COLP) and his membership of Bingham's Risk Management Committee.
Awards & Honors
• Chambers UK, Financial Services: Contentious Regulatory
• Legal 500, Financial Services Regulatory: Non-Contentious
• IFLR 1000, Financial Services Regulatory: Non-Contentious
•EU AIFMD: The One-Year Transitional Period Is Ending July 22, 2014. What Does This Mean for U.S. Fund Managers?, Bingham Webinar (2014)
•The EU AIFMD - Implications for Fund Managers in Asia,Alternative Investment Management Association (AIMA) Seminar,Hong Kong (2013)
•Update for Investment Managers on Recent Regulatory Developments in Europe and Asia, Bingham Seminar, Boston and New York (2012)
•The Regulation of Short Selling: What U.S. Financial Services Firms Need to Know, Bingham's Securities Practices Breakfast Briefing (2012)
•SEC Registration of Non-US Investment Advisers and Fund Managers: What You Need to Do Now, Bingham's Investment Management Audio Broadcast Series (2011)
•Co-author, MiFID II: The Expansion of the EU's Framework for the Regulation of Financial Markets and Securities, Bingham.com(June 2014)
•Co-author, Changes to the Use of Dealing Commission Rules, Bingham.com(May 2014)
•Co-author, In Principle, (Spring 2014)
•Co-author, Annual Review 2013, Compliance Officer Bulletin(January 2014)
•Author, Chapter 3: Short Selling, A Practitioner's Guide to Investment Banking(February 2014)
•Co-author, Markets in Financial Instruments Directive (MiFID) II Update, Bingham.com(January 2014)
•Co-author, EMIR Update: Publication of Draft Technical Standards on the Applicability of EMIR on Derivative Contracts Involving Non-European Counterparties, Bingham.com(December 2013)
•Co-author, In Principle, (Spring 2013)
•Co-author, European Markets and Infrastructures Regulation: An Overview and Update on Timing, Bingham.com(March 2013)
•Co-author, Annual Review 2012, Compliance Officer Bulletin(January 2013)
•Co-author, AIFMD Regulation, Bingham.com(January 2013)
•AIFMD - One Year to Go, Bingham.com(July 2012)
•FSA Discussion Paper 12/1 on the Implementation of the Alternative Investment Fund Managers Directive, Bingham.com(February 2012)
•Co-author, Annual Review 2011, Compliance Officer Bulletin(January 2012)
•Client Assets and Money in the Post-Lehman World, City & Financial's Compliance Officer Bulletin(November 2010)
•Co-author, FSA to Be Broken Up as Part of Substantial Regulatory Reform, Bingham.com(June 18, 2010)
•Co-author, New EU Short Selling Proposals, Bingham.com(June 16, 2010)
In the News
Focus On: Marketing U.S.-based Funds in the EU Under AIFMD
May 19, 2014 - U.S.-based fund managers should decide how to proceed in the European Union now that a one-year transitional period to comply with the marketing requirements of the EU's alternative investment fund regulation is nearing an end.
Christopher Leonard, a partner in Bingham's U.K. and EU financial regulatory group, addressed next steps for U.S.-based fund managers on a recent webinar on the Alternative Investment Fund Managers Directive (AIFMD), an EU regulation overseeing the hedge, private equity and alternative investment fund industry.
The EU introduced AIFMD as part of a legislative package in response to the financial crisis, and it became effective July 22, 2012. One portion of AIFMD outlines minimum requirements for managers who are marketing funds to investors in the EU, including certain reporting and disclosure rules.
Member states were required to transpose AIFMD into their national laws by July 22, 2013. Some EU member states have allowed a one-year transitional period until July 22, 2014, for eligible managers to market funds into that jurisdiction under the national marketing regime in place before AIFMD, and managers must now look at their next steps.
It has been a long journey to get to this point, Christopher said. AIFMD was first proposed in 2009 and we have been discussing the twists and turns of the legislative process for all of that time. Although AIFMD is now finally upon us, the journey is not complete.
That journey includes making significant decisions. Christopher noted that U.S. fund managers effectively have three options in light of AIFMD implementation across the EU:
Continue to actively market funds for EU investors, in which case the manager must comply with the individual AIFMD marketing requirements of each jurisdiction in which the marketing is conducted.
End the active marketing of funds to and accepting subscriptions from EU investors. If managers pursue this option, they should implement safeguards to prevent investors from the EU subscribing to the funds.
End the active marketing of funds to EU investors, but still accept subscriptions from EU investors through reverse solicitation.
Reverse Solicitation Risks
Reverse solicitation poses two principal categories of risks to managers, Christopher said:
An EU regulator could find the manager side-stepped the AIFMD marketing requirements and seek to impose a fine or a public censure. However, a regulator is less likely to take action against a manager unless there is widespread or systemic marketing in its jurisdiction, or unless an investor makes a complaint, Christopher said.
Managers should rely on reverse solicitation only on an ad hoc or infrequent basis, Christopher said. He added that any systemic reliance on reverse solicitation from a large number of new EU investors is likely to pique regulator interest.
Christopher was more concerned about what he called the aggrieved investor risk, which is the possibility that an investor who had lost money in the fund would seek to argue that the fund was marketed in breach of AIFMD and that the investor was therefore entitled to rescind the agreements under which its investments were made and seek the return of its capital from the manager.
Although these risks could not be eliminated, Christopher discussed ways in which they may be mitigated.
Authorized EU fund managers may market their European funds to professional investors throughout the EU on a passported basis under AIFMD. Managers must comply with AIFMD, though they are not subject to additional requirements that an EU member state may impose.
Such a passport does not yet exist for non-EU managers. A Non-EU AIFM Marketing Passport is expected to be made available in 2015, though Christopher said there has been no official confirmation from regulators that it will occur within that timeframe.
Christopher said it is anticipated that by July 2018 EU member states will be required to prohibit any person not authorized under AIFMD from marketing funds in their respective jurisdictions.
We would not be surprised if between now and 2018 there are moves to make the private placement and reverse solicitation regimes yet more restrictive, with a view to shepherding recalcitrant managers into the scope of the directive, Christopher said.
What If Our Fund Must Do Business in Europe?
If European capital is a major aspect of the fund and marketing to EU investors is imperative, Christopher said fund managers should start identifying the particular EU jurisdictions that should be targeted for marketing purposes and seek legal counsel regarding the local AIFMD requirements.
There is a lot of uncertainty with regard to the approaches taken by the various regulators, Christopher said. I would say to proceed with caution and seek advice whenever you can.