A Reed Smith team lead by John Wilkinson and Oliver s'Jacob, partners in our life sciences and investment funds teams respectively, has advised specialist investment manager Sixth Element Capital (6EC) and Cancer Research Technology (CRT) on the launch of a ground-breaking £50m investment fund, to bridge the funding gap in the U.K. between cancer drug discovery and early development!

The CRT Pioneer Fund, in which CRT and the European Investment Fund (EIF) are the principal investors, will advance potential oncology drugs from discovery through to entry to mid-stage Phase II clinical trials. 

It was launched at a press conference on 28 March, hosted by Dr Harpal Kumar (Chief Executive of Cancer Research UK), Dr Keith Blundy (Chief Executive of CRT), Richard Pelly (Chief Executive of the EIF) and David Willetts (UK Minister for Universities and Science).

Dr Keith Blundy said: “The creation of this landmark fund addresses the problem of funding the development gap which is restraining cancer drug development in the UK."

The Fund was structured as a limited partnership, in line with most venture capital and private equity funds. However, unlike most such funds, the Fund is designed primarily to invest directly in oncology drug development projects and make returns through royalties, rather than through the investment in and subsequent divestment of portfolio companies. This kicked up some interesting structuring and tax issues, in particular given the specific and very different tax treatments of the fund's initial investors, namely the EIF, CRT and management team.

We acted as sole legal counsel on the establishment of the Fund while Brodies LLP acted on the establishment of certain Socttish entities as part of the overall structure.

Click on this video link for more details!

This post was written by Maria Wall.

On 22 November 2011, the Financial Services Authority (“FSA”) publicised that it had fined Dr. Sandradee Joseph £14,000 and banned her from performing any significant influence function in regulated financial services for breaching Principle 6 of the FSA’s Statements of Principle for Approved Persons. 

Authorities in both the US and the UK have recently successfully prosecuted offenders of the U.S. Foreign Corrupt Practices Act (FCPA) and Bribery Act respectively. 

In the United States, the District Court for the Southern District of Florida sentenced the former president of Terra Telecommunications Corp to 15 years in prison for money laundering and bribery offences relating to payments of approximately $890,000 in bribes to directors of Haiti Teleco. The Court further required the defendants to forfeit $3.09 million. The payments were concealed "commissions" or "consulting fees" to shell companies, in violation of the FCPA's books and records provisions. The sentence handed down is significantly higher than previous convictions (around 7 years) however in theory under the U.S. Sentencing Guidelines Manual, he could have been sentenced to 24 years or more.

Meanwhile, Munir Yakub Patel, an administrative Magistrates' Court clerk, pleaded guilty to the Section 2 offence under the UK Bribery Act 2010 for promising a defendant to influence motor offence proceedings in return for a bribe of £500. He faces a maximum sentence of up to 10 years, although it is likely that the sentence imposed will be significantly lower than the maximum. Patel was filmed by the Sun newspaper taking the bribe and had also been charged with misconduct in public office and perverting the course of justice. Patel was due to be sentenced on 11 November 2011. However, the matter was adjourned to Friday, 18 November 2011.

This case illustrates that while the FCPA relates to bribes paid to overseas officials, the Bribery Act, on the other hand, applies both domestically and internationally and catches not only the payment but also the receipt of bribes.

It is also somewhat ironic that, despite all the hype and scaremongering surrounding the UK's introduction of tough and wide-reaching anti-bribery legislation, the first prosecution concerned a small bribe to a minor official in relation to a petty motoring offence.  However, the UK's SFO is known to have its own prosecutions in the pipeline and these will inevitably relate to much bigger and more complex cases.

Please click here to read our previous blogs on the Bribery Act.

Draft legislation was put to the Luxembourg Chamber of Deputies (Parliament) in August which proposes to amend the Law of 13th February 2007 on Specialised Investment Funds to implement UCITS IV and the AIFMD. Some of the material changes to the SIF regime:

• The requirement to translate fund articles from English into French will fall away.
• The ability to launch a SIF and apply for retrospective CSSF authorisation will be repealed.
• The individuals managing the fund's assets will have to be approved by the CSSF which must be notified of any changes to the portfolio managers.
• Generally, sub-managers exercising discretionary investment management powers will need to be prudentially managed.
• Funds will require the CSSF's approval for major changes to their offering documents including a change of name, creation of a new sub-fund or the replacement of the administrator, custodian or auditors.
• There are also additional rules on conflicts of interest and risk management.

Some of the proposals under the proposed law are positive steps for Luxembourg funds while others are indicative of how onshore unregulated funds will lose flexibility once AIFMD comes into force.

In an interesting case from the Cayman Islands, the former directors of the Weavering Macro Fixed Income Fund have been ordered to pay $110 million in damages to the Fund (after its liquidation), on the basis that this represented loss suffered by the Fund as a result of the directors' wilful neglect or default. The judgment may well scare any less than active non-executive fund directors and provides us with a useful reminder of some basic do's and don'ts, which are outlined below.