COVID-19 and the FCA: Scams, short selling and more
Examples of the alleged fraudulent behaviour include:
A government press release issued on 30 March has set out some of the steps being taken to counter misinformation about coronavirus including tackling phishing emails and scams. This includes the work of the Rapid Response Unit which was originally launched in April 2018 to monitor news and information online to identify emerging issues. The release states this unit will co-ordinate with departments across Whitehall to deploy the appropriate response, which can include a direct rebuttal on social media, working with platforms to remove harmful content and ensuring public health campaigns are promoted through reliable sources.
The various law enforcement agencies have also now issued statements acknowledging the increase in fraud and scams during the pandemic, with emphasis on collaboration between their agencies, the government and the private sector, as well as the need for the public to be more vigilant against fraud. The Minister for Security James Brokenshire stated ‘the Government is committed to working with the NCA and all law enforcement partners to tackle this and protect the public,’ with the Head of the Specialist Fraud Division at the CPS, Andrew Penhale, noting ‘the CPS continues to evolve its response’ and that ‘our prosecutors are prepared for any potential increase in fraud-related files for us to consider.'
The government has also published guidance for leaders and fraud experts in government bodies and local authorities that are administering emergency programmes as it acknowledges the fraud threat posed during emergency situations is higher than at other times. The guidance envisages the imminent threats as being:
This guidance refers to the formation of a COVID-19 Fraud Response Team by the Cabinet Office, although how it will operate is not yet clear.
In the US, the Attorney General William Barr has taken an unequivocal stance, warning ‘the pandemic is dangerous enough without wrongdoers seeking to profit from public panic and this sort of conduct cannot be tolerated.’ US Attorneys have been told to prioritise the investigation and prosecution of coronavirus related schemes and to appoint a Coronavirus Fraud Coordinator in each judicial district. These coordinators will serve as legal counsel on matters relating to the coronavirus, will direct the prosecution of coronavirus related crime, and will conduct outreach and awareness. The public have also been urged to report suspected fraud schemes related to COVID-19 to the National Center for Disaster Fraud hotline.
There are a number of criminal investigations and prosecutions already underway in the US, including:
UK law enforcement agencies will no doubt want to react quickly and vociferously to the phenomenon of coronavirus related fraud, notwithstanding the practical difficulties the current country-wide lock down presents. Interim protocol released by the CPS identifies coronavirus related fraud as falling within the category of immediate cases where charging decisions will be sought and prioritisation of these cases will take into account the need to protect vulnerable victims and deter future offending. There is already a clear appetite to improve the UK’s response to fraud, and the coronavirus pandemic may act as an additional catalyst in this regard.
For further information on the issues raised in this blog post, please contact a member of our criminal team.
Caroline Day is a Partner in our Criminal Litigation team. Caroline specialises in complex fraud and financial crime. She acts in cases of serious fraud, money laundering, corruption and cartels and has advised individuals and companies subject of investigations and prosecutions by various agencies including the Serious Fraud Office (SFO), the Financial Conduct Authority (FCA), HM Revenue and Customs (HMRC) and the Competition and Markets Authority (CMA) (formerly the OFT).
Gemma Tombs is a Practice Development Lawyer in our Criminal Litigation team. She is a practising solicitor with extensive experience in all areas of criminal and regulatory litigation. Gemma was previously a partner and consultant at Corker Binning, where she acted for individuals and corporate clients in high profile investigations and prosecutions.
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