Disclosure Of Documents To A Regulator Held Not To Infringe Privilege

The High Court has recently held that an entitlement to legal professional privilege on the part of an auditor's client is not infringed by the production of documents to the Financial Reporting Council ("FRC") when the purpose of the disclosure was for a confidential investigation carried out by the FRC into the auditor's conduct. In this briefing, we discuss this recent decision; the case of The Financial Reporting Council Ltd v Sports Direct International plc [2018] EWHC 2284 (Ch).

Background

The FRC is conducting an investigation under its Audit Enforcement Procedure ("AEP") into the conduct of the auditors in relation to the audit of some of Sports Direct International Plc's ("Sports Direct") financial statements. The FRC exercised its power pursuant to paragraph 1(3) of Schedule 2 of the Statutory Auditors and Third Country Auditors Regulations 2016, SI 2016/649 ("SATCAR") and rule 10(b) of the AEP to issue notices ("Rule 10 Notices") to Sports Direct