Three Cases, One Question: How Far Can US Financial Services Enforcement Go?

In 2025, US enforcement authorities continued to press the boundaries of their extraterritorial jurisdiction in financial services cases, pursuing UK individuals with renewed confidence and ambition. Through regulatory action, criminal prosecution and diplomatic engagement, American institutions sought to assert their reach well beyond domestic borders, often with profound implications for UK defendants and UK sovereignty.

This article examines three US-linked cases from 2025 involving UK defendants accused of financial services related offences. Together, they present a mixed and revealing picture of the current limits of US enforcement power. In the first, the US courts endorsed an expansive view of jurisdiction, effectively ratifying the long arm of American enforcement. In the second, that reach was ultimately curtailed when the UK Supreme Court intervened to block its extension. The third case took a different and more unexpected turn, as President Trump stepped in to pardon a convicted UK billionaire, demonstrating that political discretion can sometimes undercut even the most far-reaching enforcement ambitions.

Neil Phillips

The first case is that of London hedge fund manager Neil Phillips. A foreign exchange trader, Phillips bet in October 2017 that the South African rand would appreciate against the US dollar. He did so by purchasing of a “one-touch barrier option.” DOJ charged him with commodities fraud and other crimes, alleging manipulation of the dollar-rand exchange rate.[1]

Phillips apparently never set foot in the United States while engaging in the charged conduct: rather, the trades involved Phillips’ U.K.-based hedge fund, Glen Point Capital; Morgan Stanley’s London office, which underwrote the option; JP Morgan’s London branch, which sold Glen Point the option; and Morgan Stanley Capital Services, a US entity that, unbeknownst to Phillips, the broker matched as Glen Point’s counterparty. Phillips was arrested while on vacation in Spain and sent by the Spanish authorities to England, where he waived extradition and then surrendered in the United States.

Phillips contended that he should not be subject to US jurisdiction for trading activity that, as far as he knew, did not involve US parties or exchanges. DOJ, however, asserted that Phillips’ trading was encompassed by a Commodity Exchange Act provision that reaches swap activity that “has a direct and significant connection with activities in, or effect on, commerce of the United States.”[2] The Second Circuit Court of Appeals, whose jurisdiction includes the federal courts in New York, sided with DOJ. It relied primarily on two facts: J.P. Morgan’s US bank was technically the broker that entered the swap agreement with Glen Point, even though J.P. Morgan’s London branch facilitated the purchase; and the alleged victim (Glen Point’s counterparty) was a US entity. The court snidely dismissed Phillips’ protest that he did not know his counterparty’s identity, stating, “Phillips acted to defraud the ultimate counterparty, whoever that may be, but the United States does not share his indifference to his victim’s identity.”[3] The court held that the requirement that the trading have “a direct and significant connection with activities in . . . United States” was satisfied by the presence of even an unknown US counterparty because “a connection need not be foreseeable to be direct.” [4]

Future UK defendants contesting US assertions of extraterritoriality may nevertheless find support from some aspects of United States v. Phillips: the court rejected DOJ’s assertions that jurisdiction could rest on various marginal contacts with the US, including that the trades “matched on servers located in the United States,” that copies of Phillips’ Bloomberg chats were saved by Bloomberg on US servers; that the payout to Glen Point went through a New York account; and that some of Glen Points clients were based in New York as well.[5] Yet the thrust of the decision favors US prosecutors whenever they can show that alleged market manipulation harmed US persons. British defendants in the years ahead may thus be less inclined to follow Phillips’ choice to waive extradition, particularly in light of the UK Supreme Court’s landmark extradition ruling last year.

Joseph El-Khouri

In El-Khouri v. Government of the United States, the UK Supreme Court refused to permit extradition of a UK defendant to face US charges predicated on the assertion of extraterritorial jurisdiction.[6] Had El-Khouri been decided at the time of Phillips’ arrest, he might have chosen to fight extradition at home.

El-Khouri, a dual UK/Lebanese national living in the UK, was charged by DOJ with securities fraud and other crimes arising from alleged insider trading (also referred to as “insider dealing”). El-Khouri and his alleged co-conspirators resided in London. They made the trades through a UK broker, and the specific contracts involved—contracts for difference (“CFDs”) —do not trade in the United States. The charged conduct only had a single US touch: the defendant’s alleged payment to a co-conspirator in the form of a hotel stay in New York.

Section 137 of the Extradition Act 2003 governed the UK Supreme Court’s analysis. The court held that under Section 137(4), which applies where the charged conduct occurred outside the territory of the requesting state (the US), extradition is only permissible where the United Kingdom would assert extraterritorial jurisdiction if the roles were reversed. The court explained that the double criminality embodied in Section 137(4) “is a necessary safeguard against exorbitant claims where the requesting state seeks to exercise extraterritorial jurisdiction.” [7]  And the court had little difficulty concluding that the thin jurisdictional reed on which DOJ rested—the lone payment for the New York hotel room, which it characterized as a “purely incidental detail”—did not pass muster.[8] The court similarly rejected DOJ’s argument that UK money laundering statutes would permit extraterritorial jurisdiction in equivalent circumstances. [9]

Other factors could have aided El-Khouri’s extradition battle as well: the UK Supreme Court noted that the UK Financial Conduct Authority (FCA) investigated El-Khouri for more than a year and declined to bring charges. The court may have raised the point to suggest that the evidence against El-Khouri was weak. Alternatively, the court may have been chiding FCA for not asserting its authority over a defendant undisputedly subject to UK jurisdiction.

It is far from certain that Phillips could have successfully contested extradition: in El-Khouri, unlike in Phillips, DOJ did not allege that the charged conduct caused harm in the United States. That distinction could have proved fatal to Phillips had he contested extradition.  Regardless, the UK Supreme Court’s rejection of DOJ’s assertion of extraterritoriality in El-Khouri suggests a new amenability to claims of US overreach. UK persons charged with US crimes based on attenuated assertions of jurisdiction will likely avail themselves of it in the years to come.

Joseph Lewis

Any assessment of the changed landscape for financial services enforcement prosecutions would be incomplete without reference to President Trump’s extraordinary exercise of the pardon power.  At least one British citizen has benefited from the President’s largesse: British billionaire Joseph Lewis received one of the more than 1,600 pardons issued by Trump last year. Lewis’ experience will be of interest, but perhaps of limited applicability, to other UK defendants going forward.

Lewis pleaded guilty in January 2024, admitting to using inside information about various companies to enrich his girlfriends, his personal pilots (who were also criminally charged), and others. He received unusual leniency: prosecutors requested a sentence lower than the 18-to-24 months’ imprisonment recommended by the Sentencing Guidelines. They did so on account of Lewis’s age (88) and poor health, as well as his waiver of extradition and acceptance of responsibility. The court spared him jail time, assessing only a fine and a probationary term. In November, Trump gave him a full pardon.

This decision raises a number of questions. Will DOJ be reticent to pursue individuals who appear well-positioned to obtain pardons? Will prosecutors be more amenable to generous plea deals to avoid accusations of heavy-handedness? Will state and local prosecutors – whose charges are beyond the scope of the federal pardon power – rush to charge high-profile pardoned defendants, as New York prosecutors charged Steve Bannon and others for the “We Build the Wall” scheme? The opacity of the pardon process under Trump may prove among the most difficult issues for UK defendants to navigate in the year to come. Most are likely to find that Lewis’s experience is not easily replicated.

Conclusion

Taken together, these three cases illustrate both the momentum behind US efforts to extend their regulatory and prosecutorial authority overseas in financial services cases, and the legal, constitutional and political constraints that continue to shape, and occasionally resist, that expansion.

Claire Cross is a partner at Corker Binning in London and a former Senior Lawyer at the Financial Conduct Authority in the Enforcement Division. Jason M. Manning is a partner at Levy Firestone Muse in Washington DC and a former federal prosecutor in the DOJ Fraud Section. This article was first published by Thomson Reuters Regulatory Intelligence on 21st January 2026.

[1] United States v. Phillips, 155 F.4th 102 (2d Cir. 2025).

[2] 7 USC. § 2(i)(1).

[3] Phillips, 155 F.4th at 122.

[4] Phillips, 155 F.4th at 121.

[5] Phillips, 155 F.4th at 120.

[6] UKSC/2023/0127.

[7] UKSC/2023/0127 at ¶ 43.

[8] UKSC/2023/0127 at ¶¶ 66-71.

[9] UKSC/2023/0127 at ¶¶ 72-75.