Surging demand for information from aggressive US regulators is making life increasingly difficult and expensive for British businesses, a survey has found.

In the past year, over half of the UK companies surveyed had either received inquiries from regulators or conducted their own internal investigations prompted by regulatory fears, according to a study by Fulbright & Jaworski, a US law firm.

The survey found that the US Securities and Exchange Commission (SEC) was the most active regulator. Eighty-one per cent of UK businesses said they had been contacted by the securities watchdog in the last 12 months, up from just 23 per cent in 2006.

More than half of all senior in-house lawyers for the companies surveyed said that regulatory compliance was now their greatest concern.

Although the survey does not provide data for other regulators, Lista Cannon, managing partner of Fulbright & Jaworski’s London office, said increased aggression by US regulators was driving the number of UK inquiries.

Other US regulators that lawyers say have become more aggressive and time-consuming for UK companies include the Department of Justice (DoJ) and the Federal Trade Commission (FTC), both of which investigate anti-competitive behaviour.

Ms Cannon stressed that an approach from a US regulator did not necessarily mean the UK company was itself under investigation. The SEC or DoJ she said, are taking advantage of the increasingly global nature of regulatory enforcement to approach British businesses for information that may help their inquiries into other jurisdictions.

But she said that regardless of whether UK companies are assisting with, or defending against, a regulatory US probe, the result is that they are diverting more resources to satisfy the demands of foreign regulators.

This weekend, Smith & Nephew, the UK-listed medical devices group, revealed that it was the subject of an informal SEC investigation into possible breaches of the US Foreign Corrupt Practices Act.

The Act, a key driver of regulatory probes by the SEC, outlaws practices such as bribing government or company officials to win or retain business. Smith & Nephew said it was co-operating with the investigation, which also includes US rivals Striker and Zimmer Holdings.

Ms Cannon said the Foreign Corrupt Practices Act, which sparked more than 50 US investigations last year, is likely to become a further source of UK inquiries as both the SEC and DoJ use it to clamp down on bribery and other forms of business corruption.

Jo Rickards, a partner specialising in regulatory matters at Peters & Peters, said: “We have seen a surge in companies asking us for advice both in respect of their compliance obligations as well as advice where companies are responding to investigations initiated by regulators.”

Chris Warren-Smith, head of international financial services disputes at Fulbright & Jaworski, said: “The UK appears to be catching up with the US in terms of exposure to regulatory matters and in particular the increase in the number of corporate investigations over here would appear to mirror the US situation that we witnessed during the stock market downturn five or six years ago.

“Whereas regulatory inquiries have recently quietened down in the US, we’re seeing UK companies over here citing regulatory matters at the top of their list of litigation concerns.”

As well as Smith & Nephew, other UK businesses that have come under the spotlight of US regulators in the last 12 months include British Airways, Virgin Atlantic and BAE Systems.

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