A former owner of a London law firm has been fined for allowing withdrawals from the client account to pay credit card bills and buy jewellery.
Anthony Kerman, a director with Kerman & Co before it was sold to US firm Armstrong Teasdale in 2021, agreed with the Solicitors Regulation Authority a fine of £35,280 after admitting misconduct.
Kerman acted for companies owned by a single beneficial owner between 2019 and 2021, and, on their instruction, he requested and authorised the firm to make seven payments worth £1.1m from the firm’s client account.
The payments included paying credit card bills and buying jewellery. The payments were requested by the client but were not connected to any legal transaction.
Kerman also acted for another linked company where he requested and authorised the firm to make 16 payments worth £12.7m. The payments were requested by the client but were for investments and business expenses rather than any legal work.
In each matter, the SRA said he failed to ensure that the firm made adequate source of funds checks.
Read more
Kerman, admitted in 1971, assisted and cooperated with the SRA investigation and made full admissions. The SRA noted that he had undertaken AML training and proceeded on a ‘misunderstanding’ of the banking facility rule and the belief that his client was not high risk.
It was acknowledged that the rule breaches were not intentional and not a result of recklessness or gross negligence, but the SRA said the matter was to be treated as serious misconduct.
It added: ‘The breaches, even though they relate to one client group and one fee earner, are enough to constitute a course of conduct, as there were a number of transactions spread over the course of several months and totalling a significant amount. We consider this to form a pattern of misconduct.’
No harm was caused to the client and Kerman did not appear to have made any financial gain from the matter. The fine was reduced by 29% to take account of mitigating factors. Kerman also agreed to pay £1,350 costs.
Armstrong Teasdale cited ‘tremendous growth opportunities’ when it bought Kerman & Co but these did not materialise and the UK business closed earlier this year.
