David Stern examines the key challenges facing the incoming Director of the Serious Fraud Office, from high-profile prosecution failures and disclosure issues to new corporate criminal offences and the evolving landscape of financial crime. Published 15 October 2026.
The recent advertisement for the position of Director of the Serious Fraud Office (“SFO”) arrives at a particularly challenging time for the agency. For those who have spent decades within the criminal courts litigating financial crime, recent appellate decisions have exposed serious weaknesses in some of its most prominent prosecutions, while longstanding concerns over disclosure remain unresolved.
With the conclusion of the interim tenure of Graham McNulty, the incoming Director will not enjoy the luxury of a lengthy transition period. They inherit an in-tray packed with legislative change, judicial setbacks in high-profile cases and enhanced public scrutiny, all of which will require the clinical mind of a senior practitioner and the judgment of an institutional reformer.
1. The Post-Mortem of Benchmark Manipulation: LIBOR and EURIBOR
The immediate priority demanding the attention of the incoming Director is the forensic post-mortem required after the unravelling of the historical LIBOR and EURIBOR rate-rigging convictions. Following the Supreme Court’s judgment in R v Hayes; R v Palombo [2025] UKSC 29, the Court of Appeal recently quashed the convictions of five former Barclays traders, namely Messrs Mathew, Merchant, Pabon, Moryoussef and Bermingham. The subsequent quashing of Mr Bittar’s EURIBOR conviction marks a substantial reversal of the SFO’s flagship financial-crisis litigation. Of the nine convictions secured in the benchmark prosecutions, one guilty plea remains, itself potentially the subject of an appeal. [1] [2]
The Supreme Court’s judgment exposed a fundamental flaw in the legal approach underpinning the historical case theory. The courts had been invited to treat the benchmark-setting rules as prohibiting consideration of a bank’s commercial interests as a matter of law. In Hayes and Palombo, the Supreme Court held that the relevant rules had been misunderstood and that the jury directions were erroneous. [1] [2]
By framing submissions influenced by commercial interests as necessarily involving an impermissible consideration, the prosecution risked distorting the jury’s assessment of dishonesty. That is not to suggest that the absence of an express regulatory prohibition renders conduct lawful, still less that it precludes a conspiracy to defraud. The operational lesson is that any investigation targeting individual market manipulation or complex commercial mechanisms must be carefully audited. A prosecution dependent upon an erroneous interpretation of the governing market rules cannot safely proceed.
2. Other Sectors and the Limits of a Market Custom and Practice Argument
The structural vulnerability exposed by the benchmark manipulation cases raises wider questions for prosecutions concerning individual corporate executives operating in legally opaque cross-border commercial environments. A useful point of comparison is the gaming and online betting sector. Entain plc secured a Deferred Prosecution Agreement (“DPA”) under Schedule 17 to the Crime and Courts Act 2013, agreeing to pay a financial penalty and disgorgement of profit totalling £585 million in relation to historic overseas operations. While that agreement was concluded with the Crown Prosecution Service, not the SFO, it may serve as a useful example of another sector involving market custom and practice arguments for the defence. [3]
In complex and rapidly evolving commercial environments, particularly those operating across international jurisdictions with friction between local and global regulatory structures, conduct characterised by a prosecutor as being in pursuance of a dishonest conspiracy may be challenged by the defence by reference to prevailing sector practice. If the defence can demonstrate that other major international operators adopted similar payment structures or corporate configurations, such evidence may bear upon what an individual defendant knew or believed about the relevant circumstances. It does not, however, follow that industry practice is an independent defence or that conduct becomes honest simply because it is widespread.
The relevant legal approach is that identified in Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67: the tribunal of fact must first ascertain the defendant’s actual knowledge or belief as to the facts and then assess dishonesty by the objective standards of ordinary decent people. The defendant’s beliefs need not be reasonable, although their reasonableness may be evidence of whether they were genuinely held. A prevailing custom may be material to the first inquiry but cannot dictate the answer to the second. The burden and standard of proof remain unchanged. The incoming Director must critically assess whether cases involving disputed commercial practices have the evidential foundation to withstand proper scrutiny. [4]
3. Manchester City: From Regulatory Findings to Criminal Investigation?
If the incoming Director intends to signal a determined approach to enforcement, they may wish to consider the implications of the Premier League’s independent commission ruling concerning Manchester City Football Club. Contemporary reporting describes findings relating to sham commercial arrangements, disguised owner funding and the misstatement of financial information, with the aggregate value of the matters in issue reported at more than £900 million. The precise categories and sums should not be conflated. The club denies wrongdoing and has appealed the commission’s decision. The findings are therefore not final. [5]
Such findings may raise questions going beyond sporting regulation. Depending upon the admissible evidence and the mental elements established, allegations of deliberately misstated accounts or fictitious contracts could call for consideration of false accounting under section 17 of the Theft Act 1968, conspiracy to defraud or other offences. A regulatory breach, even one supported by serious findings, does not of itself establish any criminal offence.
Sporting disciplinary bodies do not possess the same investigative powers as the SFO. The latter has powers under section 2 of the Criminal Justice Act 1987 to compel production of specified documents and information and, subject to the applicable safeguards, answers to questions. Those powers do not themselves establish criminal jurisdiction or justify their exercise in the absence of the relevant statutory conditions.
If a prominent domestic corporate entity is found by a regulatory body to have submitted materially inaccurate financial information, the question of whether the underlying conduct warrants criminal investigation is one which should be considered on its merits. The potential investigation of a prominent football club with substantial international commercial interests would involve obvious practical and reputational concerns. Equally, the subject matter should not be excluded from consideration merely because it arises in the sporting sector.
4. The Anatomy of Systemic Disclosure Failures
An equally urgent systemic vulnerability demanding attention is the SFO’s recurring difficulty in satisfying its statutory disclosure obligations. For an agency whose casework is structurally defined by vast, data-heavy document reviews, disclosure has become a substantial litigation risk. The incoming Director inherits an agency affected by a succession of highly publicised trial collapses.
The most prominent failures have included individual prosecutions following corporate DPAs. The contrast between a corporate entity paying a substantial financial penalty and the subsequent failure of cases against individuals has raised questions about the investigative and prosecutorial approach. It does not follow that the termination of an individual prosecution invalidates the corporate agreement or that the evidential tests are necessarily identical.
The trial of former senior executives of Serco collapsed after serious difficulties in the disclosure process led the SFO to offer no evidence. The abandonment of proceedings against former G4S executives likewise involved unresolved disclosure difficulties. In the Unaoil litigation, the Court of Appeal in R v Akle and another [2021] EWCA Crim 1879 examined disclosure failures concerning the SFO’s dealings with a third party who had offered to assist in securing guilty pleas. More recently, in February 2026, the SFO discontinued proceedings against three individuals associated with London Mining Plc, citing disclosure difficulties, significant delays and challenges concerning witness evidence. The case also prompted a review of disclosure issues in approximately 20 other SFO cases.[6] [7]
As the HM Chief Inspector stated in its October 2026 HMCPSI Report ‘Serious Fraud Office – Progress on Disclosure’, whilst noting certain improvements have been implemented:
“Given the size and complexity of the cases it handles, no assurance framework can guarantee that a case will not encounter disclosure difficulties. The Serious Fraud Office must, however, put itself in the best possible position to minimise that risk through effective oversight, reliable management information and a clear understanding of disclosure progress throughout the life of a case.”
The incoming Director should insist upon early identification of disclosure risks, effective supervision of review teams and an audit trail capable of explaining the prosecution’s disclosure decisions. Technology may assist, but it cannot remove the responsibility to make and keep those decisions under proper review.
5. CumEx Dividend Arbitrage and Cross-border Enforcement
A notable absence from the SFO’s public enforcement record is the institution of criminal investigations relating to alleged fraudulent CumEx dividend arbitrage trading. These schemes involved numerous banks and other financial institutions and have been associated with substantial losses to European tax authorities through share transactions designed to produce multiple refund claims in relation to dividend tax. Published estimates of their overall cost vary substantially according to the transactions and countries included. Criminal proceedings have been brought in several European jurisdictions.
While courts in Germany and Denmark have pursued prosecutions relating to these arrangements, the extent to which London-based clearing, brokerage and trading activity might support criminal investigation under English law warrants careful consideration. A London connection alone does not establish the ingredients of an English offence or the necessary jurisdictional basis.
The limitations and complexities of civil remedies were illustrated by Skatteforvaltningen v Solo Capital Partners LLP (in special administration) and others [2025] EWHC 2364 (Comm). Andrew Baker J dismissed claims pursued by the Danish tax authority in deceit and related causes of action. The judgment turned upon the particular claims, representations and legal requirements in issue and should not be taken as a judicial determination that all the underlying transactions were lawful. The judgment is reported to be under appeal. [8]
That outcome does not establish that a criminal prosecution would have succeeded where the civil claim failed. It does, however, leave open the question whether sufficiently evidenced conduct with a proper territorial connection to this jurisdiction might merit criminal investigation. The rule in Government of India v Taylor [1955] AC 491 and questions concerning the enforcement of foreign revenue laws require analysis in the context of the particular causes of action and relief sought; they do not provide a simple answer to the separate criminal law issues.
The incoming Director may wish to consider whether any such London-connected transactions disclose criminal conspiracies to defraud under English law and whether the available powers under the Proceeds of Crime Act 2002 (“POCA”) could appropriately be used. Such an assessment would require an examination of the underlying evidence, jurisdiction and the availability of domestic and international assistance.
6. The Expansion of Corporate Criminal Liability
The implementation of the corporate offence of failure to prevent fraud under section 199 of the Economic Crime and Corporate Transparency Act 2023 introduced a significant extension of corporate criminal liability. The offence came into force on 1 September 2025 and applies to qualifying large organisations in respect of specified fraud offences committed by associated persons in the statutory circumstances. [9]
Unlike a purely strict liability model, an organisation may rely upon the defence that it had reasonable fraud prevention procedures in place or that it was reasonable in all the circumstances to have no such procedures. Initial prosecutions may focus upon vulnerabilities in compliance infrastructure, including the gap between a generic risk assessment and an authentic, entity-specific appraisal of fraud risk and whether a compliance programme was an active system rather than a paper exercise.
The incoming Director will need to ensure that early cases are chosen wisely. The first contested trials may provide important guidance upon the proper interpretation of “reasonable procedures”, although prosecutors cannot predetermine the judicial approach.
The legal landscape shifted further on 29 June 2026 when section 250 of the Crime and Policing Act 2026 came into force. The provision replaced and extended sections 196 to 198 of the Economic Crime and Corporate Transparency Act 2023, which had made provision for attribution of specified economic crimes committed by senior managers. Section 250 applies the attribution mechanism across criminal offences generally, subject to the statutory limitations. [10]
Under section 250, an organisation may itself be criminally liable where a senior manager commits an offence while acting within the actual or apparent scope of their authority. A senior manager is defined by reference to an individual playing a significant role in the making of decisions about how the whole or a substantial part of the activities of the body are managed or organised, or in their actual management or organisation. It is a functional definition based on operational reality rather than merely corporate title. The provision is subject to the territorial limitations set out in section 250(2).
This mechanism creates potential procedural interactions with parallel regulatory investigations conducted by the Financial Conduct Authority (“FCA”). Under the Financial Services and Markets Act 2000 and the Senior Managers and Certification Regime, the FCA operates a separate regulatory framework governing senior management functions. The incoming Director should ensure that clear protocols exist to address the use of compelled material, overlapping proceedings, the risk of abuse of process and the interpretation of such expressions as “substantial part” and “apparent scope of their authority”.
7. Modernising the Intelligence Apparatus: Whistleblowing
An agency is structurally limited by the quality of its intelligence. To transform the SFO from a reactive entity into a more proactive enforcement body, the incoming Director may wish to advocate reform of the domestic whistleblowing framework. Current government consideration of whistleblowing reform, including the current ‘Consultation on Whistleblowing’ and Jonathan Fisher KC’s ‘Fraud in the Digital Age: Independent Review of Disclosure and Fraud Offences’ published in July 2026 provide an opportunity to examine financial incentives for those supplying significant intelligence in high-value corporate fraud cases. [11]
The current domestic framework, including protection for qualifying disclosures under the Employment Rights Act 1996 as amended by the Public Interest Disclosure Act 1998, is directed principally towards protecting workers from retaliation and providing remedies where those protections are breached. Those remedies are not equivalent to financial rewards for information which leads to enforcement action. The distinction is important when considering whether senior executives possessing valuable internal records might be encouraged to come forward.
In contrast, programs operated by U.S. authorities, including the Securities and Exchange Commission, may provide financial awards calculated by reference to sanctions recovered, subject to eligibility requirements. A comparable domestic scheme might incentivise those with access to relevant corporate documents to assist investigations. It would also present proper concerns about the credibility and motivation of witnesses. Careful disclosure, testing of evidence and procedural safeguards would be essential.
8. Resources, Retention and Investigative Technology
Beyond legislative change, the SFO remains engaged in a struggle concerning funding and the retention of experienced staff. Corporate suspects may command significant legal budgets, while some individual defendants depend upon publicly funded representation. The resulting imbalance must be considered with care. Equality of arms is a question of practical fairness, not simply the comparative resources of the prosecution and a corporate defendant.
Particular attention should be paid to the recruitment, training and retention of lawyers, investigators and disclosure specialists. These functions require experience, continuity and detailed knowledge of complex evidence. Weaknesses in supervision or continuity can expose proceedings to serious disclosure difficulties.
To address large electronic disclosure exercises, the SFO has explored technological tools including automated processing and forms of machine-assisted document review. Such methods can save time but also create risks. Automated searches may fail to recognise nuance, overlook contextual connections or fail to identify material which might reasonably be considered capable of undermining the prosecution case or assisting the defence within the meaning of section 3 of the Criminal Procedure and Investigations Act 1996. [12]
The Director must ensure that the SFO can explain and defend its investigative methods, distinguish automated assistance from legal decision-making and maintain appropriate validation and auditing procedures. Without that discipline, the use of artificial intelligence may give rise to further challenges to the adequacy of disclosure or the fairness of proceedings.
9. Establishing Credibility in Crypto-Fraud Enforcement
The structural evolution of financial crime means that the new Director cannot focus solely upon traditional corporate structures. Following the SFO’s investigation into the suspected $28 million Basis Markets cryptocurrency scheme, the agency must establish its credibility in the investigation of digital assets and decentralised finance. The SFO announced its investigation in November 2025, which remains currently active. [13]
The parallel growth of artificial intelligence and borderless digital currencies presents challenges to traditional enforcement models. The ability to trace beneficial ownership, secure evidence from overseas platforms and identify assets held through complex digital structures requires specialist expertise and effective international cooperation. The agency’s investigators and asset recovery teams must be equipped to employ the appropriate investigative, restraint, confiscation and civil recovery powers, including those available under POCA, according to the circumstances of each case.
Conclusion
The incoming Director cannot afford to be a mere custodian of legacy policies. They must possess the forensic discernment to discontinue structurally flawed cases, the courage to investigate serious allegations against prominent corporate entities, the technical precision to utilise the new corporate liability provisions effectively and the organisational awareness to ensure that disclosure and investigative systems meet the demands of contemporary financial crime.
Ultimately, the SFO’s credibility will depend less upon the number or prominence of the cases it brings than upon the quality of its investigations, the soundness of its prosecutorial decisions and its ability to secure convictions that withstand appellate scrutiny.
DAVID STERN
15 October 2026
To instruct David, don't hesitate to get in touch with our dedicated clerking team on +44 (0) 207 332 5400 or email: clerks@5sah.co.uk
Authorities and sources
[1] R v Hayes; R v Palombo [2025] UKSC 29 (23 July 2025), Supreme Court judgment: https://supremecourt.uk/cases/judgments/uksc-2024-0087
[2] Associated Press, “5 traders jailed for rigging key interest rates have their convictions quashed” (7 October 2026), https://apnews.com/article/7cb4ad37b7245273f911c65a97edda5f; Reuters, “Ex-Deutsche Bank top trader’s rate-rigging conviction quashed” (9 October 2026), https://www.reuters.com/legal/government/london-court-quashes-rate-rigging-conviction-ex-deutsche-bank-trader-bittar-2026-10-09/
[3] Crown Prosecution Service, Rex v Entain plc, Deferred Prosecution Agreement (5 December 2023): https://www.cps.gov.uk/publication/rex-v-entain-plc-deferred-prosecution-agreement
[4] Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67, especially [74].
[5] Reuters, “Man City appeal Premier League financial ruling” (2 October 2026), https://www.reuters.com/sports/soccer/man-city-appeal-premier-league-financial-ruling-2026-10-02/; Reuters, “UK’s HMRC declines to say if it is investigating Man City” (14 October 2026), https://www.reuters.com/sports/soccer/uks-hmrc-declines-say-if-it-is-investigating-man-city-2026-10-14/. Pending the outcome of the appeal, the regulatory findings are not final.
[6] R v Akle and another [2021] EWCA Crim 1879.
[7] Letter from the Serious Fraud Office on the prosecution of three individuals associated with G4S cases: https://committees.parliament.uk/publications/34376/documents/189777/default/
[8] Skatteforvaltningen v Solo Capital Partners LLP (in special administration) and others [2025] EWHC 2364 (Comm).
[9] Economic Crime and Corporate Transparency Act 2023, s 199; Home Office, Guidance to organisations on the offence of failure to prevent fraud: https://www.gov.uk/government/publications/offence-of-failure-to-prevent-fraud-introduced-by-eccta
[10] Crime and Policing Act 2026, s 250, subsections (1), (2), (3) and (7): https://www.legislation.gov.uk/ukpga/2026/20/section/250
[11] Jonathan Fisher KC, Fraud in the Digital Age, Independent Review of Disclosure and Fraud Offences (Home Office, 14 July 2026): https://www.gov.uk/government/publications/fraud-in-the-digital-age
[12] Criminal Procedure and Investigations Act 1996, s 3(1) as amended.
[13] Serious Fraud Office, “SFO announces investigation into $28 million crypto scheme” (20 November 2025): https://www.gov.uk/government/news/sfo-announces-investigation-into-28-million-crypto-scheme
David Stern is an established leading practitioner in corporate and financial crime, regulation and investigations. With over 30 years’ experience and recognized in both Chambers & Partners and the Legal 500, he has acted on some of the most high-profile cases, both in England and internationally, including LIBOR, Cum-Ex and the World Trade Center insurance case. His advice is sought on all aspects of serious allegations of financial wrongdoing, regulation and commercial dispute resolution.
