A&O Shearman settles Nationwide negligence dispute over listing error

A&O Shearman has settled its professional negligence case with Nationwide and the Bank of New York Mellon (BNY), bringing an end to a dispute over an £83 million tax charge tied to securities that weren't listed.

The firm confirmed the matter had been resolved, while a BNY spokesperson told Non-Billable the dispute was settled "without admission of liability on terms that are confidential."

Background

The issue arose after A&O-advised Nationwide issued several series of US medium-term notes in 2018 and 2019 that were not listed on the London Stock Exchange. Nationwide would have qualified for the quoted Eurobond exemption if the notes had been listed and avoided the resulting withholding tax bill by being listed on a recognised exchange.

The central question in the dispute was whether responsibility for securing the listing rested with BNY - the trustee and paying agent on the deal - or whether A&O had been expected to direct it to take that step. BNY maintained that it only sought listings when specifically asked to do so and that no such instruction was given for the notes.

Nationwide turned to Travers Smith and brought proceedings against legacy firm Allen & Overy and BNY.

The claim against the bank was later withdrawn. A&O Shearman, represented by Clyde & Co, went on to issue a contribution claim to bring BNY back into the litigation earlier this year and share liability. BNY turned to Hogan Lovells for its defence.