SDT: Technical violation of accounting rules

A solicitor who used his firm’s client account as a personal banking method did not need to admit he had breached the public trust, the Solicitors Disciplinary Tribunal (SDT) has ruled.

But Richard Harbord acted without integrity by failing to cooperate with the Solicitors Regulatory Authority (SRA) for several years over missing accounting reports.

The Surrey-based lawyer, who qualified in 2002, was the owner of Harbord & Co, a recognized unique practice, since 2007, and a partner at McGlinchey & Co since 2016, holding compliance roles in both cases.

He went bankrupt last year and his practicing certificate was subject to various restrictions. The bankruptcy order is set to expire this month.

McGlinchey & Co represented Mr Harbord in the sale in 2017 of his former marital home and in 2019 of the former office premises shared by the two companies.

The proceeds were held in the client account until 2020, during which time there were several payments totaling £386,641 to Mr Harbord personally or for personal payments under his direction, and £315,970 in the form of loans to two companies.

The SDT calls this a “technical violation” because it poses no risk of money laundering – “the main harm the rules are designed to prevent”.

Furthermore, Mr. Harbord had been “negligent (but no more)” in not realizing that his conduct violated accounting rules. He said he wouldn’t have done that if it had been a client’s money.

Mr. Harbord “now admits that he should have researched the matter further (beyond speaking to the firm’s accountant and a fellow associate) and ensured that he was not allowed to keep his own money on the customer account.

He admitted breaching various principles and rules, most of which were accepted by the SDT, but said his admission that this conduct had damaged public confidence in the profession was “not properly done” given that other clients’ funds had not been put at risk.

There were outstanding accounting reports for both companies dating back to 2020, which amounted to a breach of accounting rules, but the SDT did not accept that Mr Harbord had failed to hand them over to the SRA, as it was couldn’t say for sure that they would. were qualified. Once again, his admission in this regard was not properly made.

But it concluded that he had acted “without integrity by failing to cooperate and communicate candidly” persistently and over a long period of time with the SRA regarding obtaining the reports and by failing to take the remedial action requested by the SRA “although he was given ample opportunity to do so.”

Mr Harbord was also found to have failed in his duties as Compliance Officer for Finance and Administration.

The SDT heard that Mr Harbord had a regulatory history dating back to 2003, when he was severely reprimanded after being found guilty of possessing 0.41g of cocaine, while in 2012 the SRA issued him with a warning for violation of accounting rules.

In 2017, he was fined by SDT after failing to disclose to the court that he had a personal relationship with a client in the context of a family law proceeding.

In mitigation, Mr Harbord cited “ongoing health issues”, which had started around 2017 and left him unable to work for prolonged periods. The resulting drop in revenue left him unable to pay his accountants to produce late reports, which ultimately led to his bankruptcy.

However, he said his health had improved over the past year since he fully cooperated with the SRA. Both companies were in the process of closing down, but he had been offered a job with a new entity, Harbord & Co, which would be managed by his partner. He also said he would not seek to have conditions removed from his practicing certificate.

The SDT concluded that Mr Harbord had demonstrated a “genuine understanding of his misconduct by making full and open admissions”.

His misconduct “may have resulted, at least to some extent, from his poor health and consequent lack of funds,” although these “did not entirely excuse” his misconduct.”

He fined Mr Harbord £8,500 and ordered him to pay costs of £40,000, but the order should not be carried out without the permission of the SDT, given the uncertainty of his financial situation.