Financial Services

FSA v Derek Wright 23/2/11

Thu, 09 Jun 2011 15:41:25 GMT

The FSA published its decision notice of its findings in respect of Mr Wright and its decision to prohibit Mr Wright from all regulated activity on honesty, integrity and competence grounds. The FSA believes that Mr Wright was unwilling to comply with the FSA approved person regime and provided misleading information to the FSA. In particular the FSA’s opinion is that Mr Wright arranged for his wife to take on the FSA approved roles while he actually ran the firm. Mr Wright has referred the matter to the Tribunal.

FSA v Stuart Unwin 2/3/11

Thu, 09 Jun 2011 15:41:06 GMT

The FSA published its decision notice of its findings in respect of Mr Unwin and its decision to prohibit Mr Unwin from holding a significant influence function. The FSA’s view is that Mr Unwin failed to ensure that his firm had adequate systems and controls to ensure that occupational pension transfer advice given by his firm was suitable and signed off by a pension transfer specialist, despite being previously warned by the FSA that he must do this. Mr Unwin has referred the matter to the Tribunal.

R (ex p. British Bankers Association) v Financial Services Authority and Anr 22/4/11

Thu, 09 Jun 2011 15:40:31 GMT

The Court rejected the BBA’s challenge to the FSA’s policy statement on assessing and providing redress in respect of past sales of PPI policies. While the principles for business are not actionable per se, they were relevant in assessing a firm’s obligations to its clients and could and should be taken in to account by the ombudsman in assessing a complaint. The principles provide the overarching framework for financial regulation. The presence of more detailed rules in respect of the sales of a product did not mean that the wider objects of the principles were suspended or displaced. Equally the fact that the FSA could have referred the whole issue to the Treasury for a scheme proposal did not displace the FSA’s regulatory powers to address the issue.

Curren v FSA [2011] UKUT B19 (TCC) 21/03/2011

Thu, 09 Jun 2011 15:13:26 GMT

The FSA contended that the first claimant, as the controlling director of the company, had submitted dishonest mortgage applications for some of the company's clients, that he had known that the applications were dishonest, and that he had otherwise conducted the company's business in a manner which showed that he was not fit and proper to be an approved person. He admitted a lack of competence but denied dishonesty or any lack of integrity. He further submitted that the prohibition imposed on him was unnecessarily severe and that the penalty was wholly disproportionate to the gravity of his failings and his means. A further question arose as to whether the imposition of a monetary penalty was appropriate. It was decided that the first claimant's conduct was of such a character that prohibition was not enough. The gravity of his behaviour made it necessary to impose a penalty, as punishment of the first claimant and as a deterrent to others. Merely prohibiting a person from such conduct i n the future was insufficient and, accordingly, a penalty was appropriate.

FSA v City Index Limited 20/1/11

Thu, 24 Feb 2011 23:37:15 GMT

The FSA fined City Index £490,000 for failing to provide accurate transaction reports to the FSA. Between November 2007 and September 2009, City Index failed to submit accurate transaction reports in respect of approximately 2 million transactions, representing nearly 60% of its reportable transactions. If failed to report approximately 55,000 transactions and reported approximately 1,970,000 transactions with one or more data fields completed improperly. City Index was also found to be in breach of FSA Principles as the firm failed to put in place a mechanism for ensuring the accuracy and validity of its transaction reports and failed to identify fundamental errors in its transaction reporting process upon the implementation of a new trading platform. City Index took a number of steps to address the concerns raised by the FSA including commissioning a formal review of its transaction reporting processes by external consultants and implementing a comprehensive remediation project. City Index agreed to settle at an early stage. In doing so it qualified for a 30% discount without which the fine would have been £700,000.

R v Rollins 21/1/11

Thu, 24 Feb 2011 23:36:47 GMT

Neil Rollins a former senior manager of PM Onboard Limited, a waste industry firm, was sentenced to 27 months in prison for five counts of insider dealing and four counts of money laundering after he traded on the basis of information he obtained as a result of his senior position and laundered the proceeds. Mr Rollins was also ordered to pay £197,000.66 in confiscation.

FSA v Maranzana and Finger 15/12/10

Thu, 03 Feb 2011 23:41:02 GMT

The FSA fined and banned chartered accountants Paolo Maranzana and Laurence Finger for Sedley Richard Laurence Voulters’ involvement with a boiler room share scam. Maranzana was fined £105,000 and banned from working in financial services. Finger was fined £35,000 and banned from being a Money Laundering Reporting Officer. SRLV was fined £163,140.

FSA v Naqui 16/12/10

Thu, 03 Feb 2011 23:40:24 GMT

The FSA banned and fined Nabeel Naqui the former Head of the Credit Products Group Europe and Asia Pacific at Toronto Dominion Bank £750,000 for deliberately mismarking his trading positions and misleading fellow staff to conceal his losses over a period of two years. The effect of correcting his mismarking was a downward valuation of CAD $96 million on his books.

FSA v Scottish Equitable Plc 16/12/10

Thu, 03 Feb 2011 23:40:02 GMT

The FSA fined Scottish Equitable Plc £2.8 m for causing significant consumer detriment through poor administrative procedures. Scottish Equitable Plc will pay consumer redress of about £60 million, of which £30 million was to have been paid by the end of 2010.

FSA v Williams 6/1/11

Thu, 03 Feb 2011 23:39:36 GMT

The FSA fined Barry Williams £25,000 and banned him from working in regulated financial services for his part in a scheme that defrauded London market insurers of more than £2 million. While not a participant in the fraud, as a director of Surety Guarantee Consultants Limited (SGC) Williams deliberately ignored his responsibilities as an approved person, turning a blind eye despite clear warnings about the true nature of the scheme. SGC had held binding authorities with Markel and QBE and had written business beyond its authorised limits and did not pass on the premium to insurers. On audit by insurers SGC produced false documents intended to show that it kept within the terms of the binding authorities.

FSA v RBS and Natwest 11/01/11

Thu, 03 Feb 2011 23:35:17 GMT

The FSA fined Royal Bank of Scotland and National Westminster Bank £2.8 m for multiple failings in the way they handled customers’ complaints, responding inadequately to more than half the complaints reviewed by the FSA. The FSA’s investigation found that there was an unacceptably high risk that customers may not have been treated fairly due to a number of failings within the banks’ approach to routine complaint handling including delays in responding to customers; poor quality investigations into complaints; issuing correspondence that failed to fully address all of the concerns raised; customers not receiving their Financial Ombudsman Service referral rights within the appropriate time period.

FSA v Gower 13/1/11

Thu, 03 Feb 2011 23:34:57 GMT

The FSA fined Christopher Gower £50,000 for making misleading and inaccurate disclosures to the market about Enterprise Inns plc to clients via Bloomberg instant messenger, substantially impacting its share price. Mr Gower is a former senior research analyst employed by MF Global Securities Limited and MF Global UK Limited. He attended a meeting with the CEO of Punch Taverns plc on 7 May 2008 at which information already in the public domain was discussed. Following that meeting he sent an instant message headed “*** Hot off Press ***” to 14 clients, a reporter and MF Globl equity salesmen reporting matters supposedly discussed at the meeting, and giving the impression of having obtained inside information when he had not. The information contributed to a substantial increase in the volume of ETI shares traded.

Betton v FSA 19/11/10

Thu, 03 Feb 2011 23:34:35 GMT

A prohibition order against a stockbroker pursuant to the Financial Services and Markets Act 2000 s. 56 was merited where he had been actively involved in a share ramping scheme.

FSA v Barclays 18/1/11

Thu, 03 Feb 2011 23:34:16 GMT

The FSA fined Barclays Bank plc £7.7 million for failures in relation to the sale of two funds, Aviva’s Global Balanced Income Fund and Global Cautious Income Fund. Barclays has already paid £17 million in compensation and the FSA estimates up to a further £42 million will need to be paid.

FSA v Clark Rees LLP 19/1/11

Thu, 03 Feb 2011 23:33:55 GMT

The FSA fined and banned two partners of the investment firm Clark Rees LLP for failing to ensure the firm made suitable recommendations to its customers regarding Unregulated Collective Investment Schemes.

FSA v Scerri 20/10/10

Thu, 25 Nov 2010 13:23:55 GMT

The Tribunal decided it was appropriate for the FSA to impose a financial penalty of £66,062.50 of Mr Scerri for market abuse. This was an increase of £20,000 over the penalty originally imposed by the FSA. The fine represents disgorgement of profits made thought the use of inside information and a penalty of £20,000 for engaging in market abuse. The market abuse arose after Mr Scerri was tipped off that a company in which he had placed orders to purchase shares was about to announce a share placement. On the basis of the information Mr Scerri withdrew his orders and began selling his existing position. Mr Scerri was then contacted by his broker who formally made him an insider. Nonetheless Mr Scerri then subsequently sold the remainder of his existing position prior to the public announcement and then rebuilt his position by subscribing to the share placement. The FSA had originally decided not to impose the additional penalty of £20,000 because it would cause Mr Scer ri serious financial hardship. However the FSA presented evidence to the Tribunal that the information Mr Scerri had provided to the FSA in connection with his financial position was incomplete and misleading and after being notified of the proposed penalty Mr Scerri had invested and lost substantial funds through hundreds of trades in indices and currencies and thus arose out of self-induced damage.

Andrews v SBH Benefit Consultants 5/11/10

Thu, 25 Nov 2010 13:23:25 GMT

An award by FOS accepted by the complainant debars a further claim above the FOS compensation limit of £100,000 in the civil courts. If the complainant wishes for more the FOS decision can be rejected and the claim should be brought in the courts.

FSA v Gerald Classey 27/9/10

Thu, 21 Oct 2010 18:47:24 GMT

The FSA has banned Mr Classey failing to discharge his responsibilities as a partner of First Colonial Investments LLP. The FSA decided that he demonstrated a serious lack of competence and capability in carrying out the controlled function of a partner and was, therefore, not a fit and proper person contrary to the FSA principles.

FSA v Thorntons Law LLP and Others 22/9/10

Thu, 21 Oct 2010 18:46:55 GMT

The FSA imposed a financial penalty of £35,000 on the Dundee firm Thorntons Law LLP in relation to the sale of Lehman-backed structured products between November 2007 and August 2008. A partner of the firm, Michael Royden, was fined £10,500 and another individual, Robert Yarr, from the IFA firm was fined £28,000 in connection with this matter.

FSA v Fabio Massimo De Biase 27/9/10

Thu, 21 Oct 2010 18:46:29 GMT

The FSA fined Fabio Massimo De Biase, a former cash equities broker, £252,239 for acting without integrity. He qualified for a 30% reduction in his financial penalty for an agreement to settle the matter early. The FSA also banned De Biase from working in the financial services industry on the grounds that he was not a fit and proper person.

FSA v Advantage Capital

Thu, 21 Oct 2010 18:46:09 GMT

The FSA is set to close down Advantage Capital for breaching minimum capital requirements in what would be the first action of its kind against a European private equity house. Advantage has also been battling its cornerstone investor Robert Adair, the oil and gas magnate. In July 2010, the private equity firm took Mr Adair to the High Court for failing to make contractually-obliged payments.

FSA v Goldman Sachs International 9/9/10

Thu, 21 Oct 2010 18:45:37 GMT

The FSA fined Goldman Sachs £17.5 million for breaches of principles 2, 3 and 11 which occurred between July 2009 and April 2010. In August 2008 the SEC began enquiries, which later started an investigation of Goldman Sachs. In breach of the FSA principles, Goldman Sachs did not have effective systems and controls in place to ensure that relevant information about the SEC investigation was shared between the people within Goldman Sachs group who needed to know about it. In particular, Goldman Sachs did not have effective procedures in place to ensure that its compliance department was made aware of the SEC investigation so that it could consider whether any notifications needed to be made to the FSA in compliance with Goldman Sach’s regulatory reporting obligations.

FSA v Zurich Insurance 24/8/10

Thu, 23 Sep 2010 15:07:01 GMT

The FSA fined Zurich Insurance £2,275,000 for failing to have adequate systems and controls in place to prevent the loss of customers’ confidential information following the loss of personal details in respect of 46,000 policy holders. This is the highest fine levied to date on a single firm for data security failings. This represented a discount of 30% for early settlement from a fine of £3,25 million.

FSA v Societe Generale 25/8/10

Thu, 23 Sep 2010 15:06:42 GMT

The FSA fined the London branch of Societe Generale £1,575,000 for failing to provide accurate transaction reports to the FSA. The fine reflects the seriousness of the firm’s failure to submit accurate reports for approximately 80% of its reportable transactions across all of its asset classes, for a period of over two years.

FSA v Ogboru and Winton 31/8/10

Thu, 23 Sep 2010 15:06:17 GMT

The FSA has banned Ngozika Ogboru who ran J N Finance (UK) Limited from carrying out any regulated activity. A FSA investigation found that advisers at the firm were able to submit false and misleading mortgage applications to lenders using Ms Ogboru’s log-in details without her prior knowledge and allowed the firm to continue to operate despite recognising her inability to manage it and the warning signs that it was being used for fraud. Mr Winton of Mortgage Healthcare Limited in Dundee was fined £31,500 and will not be able to hold a senior position in a financial services firm for two years following delegation of the operation of the business of his firm to two non-approved advisers and a failure to take any action to rectify problems identified by the FSA on a visit.

FSA v Moneywise IFA Limited 2/9/10

Thu, 23 Sep 2010 14:59:58 GMT

The FSA fined Moneywise £19,600 for failing to have sufficiently robust compliance arrangements for the investment advice it gave customers using platforms and discretionary portfolios. The FSA’s investigation concluded that Moneywise’s compliance arrangements did not evolve as its business grew and the firm did not have robust arrangements for training advisers and ensuring liability reports were clear, fair and not misleading. Moneywise also recommended platform-based investment to 519 customers but failed to ensure its advisers explained their rationale clearly to investors. Moneywise had not made it clear to customers that some of the underlying investments contained Unregulated Collective Investment Schemes and the associated risks that needed to be understood. However the FSA did not find any evidence that customers had suffered any financial detriment and Moneywise appointed an external compliance consultant, implemented recommended changes and appointed a new compliance officer a t board level. Accordingly Moneywise’s fine was £28,000 reduced by a further 30% to £19,600 to reflect an early settlement.

FSA v Marriott 2/9/10

Thu, 23 Sep 2010 14:59:03 GMT

The FSA imposed a lifetime ban on David Marriott, former chief executive of two insurance intermediaries, Target Underwriting Ltd and Professional Insurance Select Ltd for failing to segregate and protect money from clients’ insurance premiums. The client money was used to support the day to day finances of the firms for among other purposes the payment of bonuses and salary increases and company cars despite a background of worsening trading positions and loss of business. His actions led to a client money deficit of £570,841. Mr Marriott also provided false and misleading information to the FSA in his applications for authorisation in order to cover up his misuse of clients’ money.

FSA v Jeffery, Aspden, Clayton and Willment 17/8/10f

Thu, 23 Sep 2010 14:58:41 GMT

The FSA banned five individuals for failings in relation to insurance fraud and imposed one of its largest ever fines for insurance fraud of £150,000 on one individual. Andrew Jeffery of Jeffery Flanders (Consulting) Limited was banned and fined £150,000 for recklessly failing to put in place insurance policies appropriately or, in some cases, at all, despite collecting payment from customers. The conduct was particularly serious because many of the customers were elderly or vulnerable; the insurance related to household and motor insurance; Mr Jeffery had knowingly forged documentation and correspondence potentially to mislead insurance companies; and Mr Jeffery obstructed the FSA’s investigation by failing to report changes to the firm’s contact details and not providing documents or attending meetings at the request of the FSA. Barrie and Melanie Aspden, Gaenor Clayton and Paul Willment were all involved with Orion Direct Limited and Peppercom plc. All were banned. Mr Aspden kno wingly used approximately £300,000 of client money to finance the creation of a new company, an online insurance site, which traded as Peppercom. Having been made bankrupt and unable to attain approved person status, he put in place as directors his wife and sister-in-law and a family friend all who lacked the competence and skills to perform their roles. His wife and sister-in-law admitted not having the necessary experience for the director role and would have each been fined £35,000 were it not financial hardship. Mr Willment was fined £50,000. He rarely attended the offices, had no active involvement in the management of the business and delegated his roles and duties to Barrie Aspden. Although Mr Willment was aware of the withdrawal of about £300,000 he did not challenge Mr Aspden in respect of it.

FSA v David Jones 27/7/10

Wed, 08 Sep 2010 18:32:44 GMT

Systems and controls

FSA v Royal Bank of Scotland 3/8/10

Wed, 08 Sep 2010 18:32:22 GMT

Systems and controls

FSA v Coles, Ryan and Yamoah 28/7/10

Wed, 08 Sep 2010 18:31:59 GMT

Systems and controls

FSA v Burley and Burley 19/7/10

Wed, 08 Sep 2010 18:31:36 GMT

Market Abuse

FSA v Upton & Co 20/7/10

Wed, 08 Sep 2010 18:30:50 GMT

Collective Investment Schemes

FSA v Redstone Mortgages Limited 15/7/10

Wed, 08 Sep 2010 18:30:25 GMT

Treating customers fairly

FSA v The Garrison Finance Centre 30/7/10

Wed, 08 Sep 2010 18:30:01 GMT

The FSA publicly censured The Garrison Finance Centre Limited for failing to communicate clearly the risks of complex investment products (geared traded endowment policies) to their customers. As Garrison is in liquidation the FSA has waived the £35,000 fine it would have imposed so that the money can be used to meet customer claims. The FSA has instructed the liquidator to write to the firm’s GTEP customers informing them they may have received unsuitable advice and could be entitled to make a claim.

R v Rollins (Appellant), [2010] UKSC 39, 28/07/2010

Thu, 05 Aug 2010 18:32:34 GMT

The Financial Services Authority (‘the FSA’) had brought a criminal prosecution against the Appellant, Mr Neil Rollins, for (i) offences of insider dealing contrary to section 52 of the Criminal Justice Act 1993 and (ii) offences of money laundering contrary to sections 327 and 328 of the Proceeds of Crime Act 2002 (‘POCA’). The allegations under (i) related to the sale of shares in a company by which he was employed. The allegations under (ii) related to the transfer of part of the proceeds of the sale from his bank account to a bank account in his father’s name.

The Appellant contended that the FSA’s powers to prosecute criminal offences were limited to the offences referred to in sections 401 and 402 of the Financial Services and Markets Act 2000 (‘FSMA’). He conceded that the FSA had power to prosecute the insider dealing offences under section 402 of FSMA. However, he challenged the FSA’s power to prosecute the money laundering offences, since this had not been provided for by s. 402. He argued that FSMA set out a complete code within which the FSA had to operate and that its only powers to prosecute were those referred to in sections 401
and 402.

The Crown Court and the Court of Appeal rejected the Appellant’s arguments. The Appellant appealed to the Supreme Court.

The Supreme Court unanimously dismisses the appeal. It holds that the Financial Services Authority does have the power to prosecute the money laundering offences. Sir John Dyson SCJ gave judgment on behalf of the Court.

FSA and FRC 30/6/10

Wed, 28 Jul 2010 22:10:52 GMT

The FSA and the Financial Reporting Council (FRC) have issued a discussion paper which considers ways of enhancing auditors' contribution to regulation. The purpose of the paper is to stimulate debate on the role of auditors following the financial crisis. The paper therefore explores how the FSA, the FRC and auditors can work together more effectively to enhance auditors' contribution to prudential regulation. The deadline for responses is 29 September 2010.

FSA v Way and Shillaker 8/6/10

Wed, 28 Jul 2010 22:07:05 GMT

The FSA took action against two insurance brokers for failing to adequate protect clients’ money and assets. Mr Way, the director of Shield Insurance Consultancy Ltd was fined £77,957 and banned from working in financial services for putting clients at risk by failing to ensure their insurance premiums were passed on to insurers. Mr Shillaker, the director of Griffiths McAlister Insurance Brokers Ltd was banned from working in financial services for knowingly transferring client money to the business account to fund its business expenses. Mr Shillaker was not fined because he provided evidence that this would cause him serious financial hardship.

FSA v Vantage 21/6/10

Wed, 28 Jul 2010 22:06:29 GMT

The FSA fined Vantage Capital Markets LLP £700,000 for failing to prevent Daniel Hassell from performing a significant influence function without obtaining the FSA’s approval over the period of more than four years. Vantage knew that Mr Hassell was not an approved person and that the FSA was not satisfied that he was a fit and proper person to perform a significant influence function. While Mr Hassell was described as a consultant he in fact exercised a significant influence over Vantage’s operations.

FSA v David Head 9/7/10

Wed, 28 Jul 2010 22:05:22 GMT

The FSA fined David Head, director of Essex based mortgage and insurance broker network FT Compliance Services Limited (“FTCS”), £10,500 for failing to properly supervise insurance brokers who he knew had close links with a firm and individual previously disciplined by the FSA for Payment Protection Insurance (“PPI”) failings. FTCS operated as a network and recruited mortgage and insurance brokers as appointed representatives. Mr Head was solely responsible for ensuring FTCS and its brokers were compliant but he failed to put in place systems and controls to ensure that the brokers made suitable recommendations. Mr Head therefore exposed customers to the risk of purchasing unsuitable PPI.

FSA v N-Hanced LLP 8/7/10

Wed, 28 Jul 2010 22:04:55 GMT

The FSA fined an IFA firm, N-Hanced LLP, £21,000. The FSA found that the firm had not recorded sufficient information about customers to demonstrate that its advisers had identified their clients' needs and reflected them in any recommendations they made. -Hanced LLP also failed to adequately monitor the quality of its pension switching advice and record relevant management information on its pension switching business. Without these systems, the firm would not have been able to monitor its sales process or identify and address problems.

FSA v Morton, Meah, Smith, Tewari, Adu and Oliver 6/7/10

Wed, 28 Jul 2010 21:59:10 GMT

The FSA has banned six individuals for failings in relation to mortgage fraud. The FSA found that all lacked honesty and integrity, most had committed mortgage fraud by providing false or misleading details in mortgage applications and a number had deliberately obstructed investigations. Messrs Morton, Meah and Smith worked for Neale Morton IMS Limited. Mr Morton was fined £130,192 for knowing involvement in mortgage fraud and for systems and controls failings for which we has personally culpable. £5,192 represents a disgorgement of profits. Morton submitted mortgage applications for himself that used false income details and allowed his firm to be used for mortgage fraud by its advisers and customers. Mr Smith and Mr Meah produced falsified compliance documents during the FSA’s investigation. Mr Smith also submitted falsified mortgage applications and Mr Meah did not notify the FSA he had been arrested on suspicion of money laundering and suspended as a mortgage adviser. Ms Tewari used different mortgage intermediaries to submit two applications in her own name containing false income information inflating in one instance her income by 300 per cent. Adu, trading as Distinct Financial Services used a mortgage intermediary to submit mortgage applications containing false information lying about his nationality and inflating his income and on behalf of fictitious customers. Mr Oliver, trading as Finesse Financial provided false information to support his applications for approval under the Approved Persons regime and have submitted a mortgage application for himself which contained false information.

FSA v Paul Armitage, Huw Evans and Brian Smith 7/7/10

Wed, 28 Jul 2010 21:58:44 GMT

The FSA had fined three individuals Paul Armitage, Huw Evans and Brian Smith, who were all partners and approved persons of Pace Financial Management, a firm of independent financial advisers and mortgage brokers based in Sheffield. Mr Armitage and Mr Evans were both fined £17,500 and Mr Smith was fined £14,000 for failing to implement appropriate systems and controls. The partners failed to supervise effectively the other partners and mortgage advisers at the firm, and failed to put in place effective file checking procedures. Consequently a fourth partner was able to carry out financial crime with a mortgage adviser working for them.

FSA v Charalambous, Greenland and Goldman 16/6/10

Wed, 28 Jul 2010 21:58:06 GMT

The FSA banned three mortgage brokers from working in the financial services industry and fined two of the brokers £294,500 and £120,000. Mr Charalambous was a director of the Financial Associates Ltd in Sidcup Kent. He was fined £294,500 for taking part of a customer’s mortgage advance and for attempting to defraud life insurance companies. He advised a customer to remortgage a property and increased the amount of the loan on the mortgage application without the customer’s knowledge or approval and transferred the excess in to his bank account and then wrote cheques that were not honoured. He also set up life insurance policies in the names of customers without their knowledge to obtain commission. Mr Greenland was an approved person of Guardian was banned and fined £120,000 for knowing involvement in mortgage fraud and failing to ensure Guardian had appropriate systems and controls. Mr Goldman of Goldman Group Manchester was banned for submitting a fraudulent applica tion for himself in 2007 and for submitting fraudulent mortgages for three closely related clients. He would have been fined £102,158 if he had not been declared bankrupt in November 2009.

FSA v Timothy Higgins, Clifford Felstead and Ralph Brunswick 8/7/10

Wed, 28 Jul 2010 21:53:11 GMT

The FSA banned three individuals, Timothy Higgins, Clifford Felstead and Ralph Brunswick, from financial services for their involvement in a scheme which defrauded Markel International Insurance Company, QBE Insurance (Europe) and Amalfi Underwriting over an extended period of time, exposing them to significant losses. Mr Higgins was a director and founder of Surety Guarantee Consultants (“SGC”) and Mr Felstead was an employee of SGC in a management role. SGC held binding authorities with London market insurers, Markel and QBE, through its agent Amalfi, to issue surety bonds. SGC wrote business that exceeded its authorised limits, exposing Markel and QBE to greater liabilities than they had agreed. In doing so, SGC made secret profits and withheld over £2 million that should have been paid to the insurers. Brunswick provided false documents to cover up the fraud.

R v Ahmad 22/6/10

Wed, 28 Jul 2010 21:52:38 GMT

Mr Ahmad, an ex-hedge fund trader and risk manager with AKO Capital LLP was sentenced to 10 months imprisonment, suspended for two years, given 300 hours of unpaid work in the community and fined £50,000 for insider dealing following a plea of guilty to one count of conspiracy to commit insider dealing contrary to section 1 of the Criminal Law Act 1977. A further offence of insider dealing committed on 19 February 2008 was taken in to consideration. Mr Ahmad had pleaded guilty after entering in to an agreement with the FSA under the Attorney General’s Guidelines on Plea Discussions in Cases of Serious or Complex Fraud. He entered in to an agreement with the FSA under section 73 of the Serious Organised Crime and Police Act 2005 to assist the FSA with its investigation in to his co-conspirator. A confiscations order was also made against Mr Ahmad in the sum of £106,280. Mr Ahmad has also agreed to a Final Notice requiring him to pay a sum of £131,000 to the FSA representing the dis gorgement of profits he made from regulatory misconduct unrelated to the insider dealing by directing preferential trades and rates of commission towards an associate of his who worked as a case equities broker in exchange for the payment of cash and gifts.

FSA v Photo-Me 22/6/10

Wed, 28 Jul 2010 21:51:59 GMT

The FSA fined Photo-Me £500,000 for creating a false market in its shares for 44 days by delaying the release of unfavourable trading reports. This is the largest fine by the FSA against a firm for breaching disclosure and transparency rules.

FSA v Henry Cameron 6/7/10

Wed, 28 Jul 2010 21:42:22 GMT

Misleading Announcements

Southern Pacific Securities 05-2 Plc (in substitution for Southern Pacific Personal Loans Limited) (Respondent) v Walker and another (Appellants) ([2010] UKSC 32)

Thu, 08 Jul 2010 18:54:21 GMT

The parties entered into a fixed sum credit agreement on 20 April 2005 whereby Southern Pacific Securities (the respondent) loaned Mr and Mrs Walker (the appellants), the sum of £17,500. In addition to the loan a ‘Broker Administration Fee’ of £875 was advanced to the appellants to enable them to pay for the arrangement of the loan. Interest was payable on the Broker Administration Fee at the same rate as on the loan of £17,500. The credit agreement set out the ‘Amount of Credit’ as £17,500 (being the loan) and the ‘Total Amount Financed’ as £18,375 (being the loan together with the Broker Administration Fee).

The issue in the appellants’ appeal to the Supreme Court is the correct definition of an ‘amount of credit’ under the Act, and whether the Act permits interest to be
charged on a sum (such as the Broker Administration Fee) which is not part of the total amount of credit but rather is a charge for credit.

The Supreme Court unanimously dismisses the appeal. Although the Broker Administration Fee of £875 was advanced to the appellants and repayable with interest, it was part of the total cost of, or charge for, credit and therefore cannot be treated as part of the credit.

R v Ahmad 18/5/10

Mon, 28 Jun 2010 16:46:17 GMT

Anjam Ahmad pleaded guilty at Southwark Crown Court to one count of conspiracy to commit insider dealing relating to transactions in the shares of 22 companies. Sentencing is scheduled for 22 June 2010.

R v King and McFall 3/6/10

Mon, 28 Jun 2010 16:45:55 GMT

Mr King and Mr McFall were acquitted at Southwark Crown Court of insider dealing. This was the FSA’s first unsuccessful prosecution for market abuse.

FSA v Mason 8/6/10

Mon, 28 Jun 2010 16:45:35 GMT

The FSA charged Mr Mason with five offences including making misleading statements to investors, conspiracy to defraud and money laundering in respect of share sales to UK consumers by boiler rooms between November 2008 and June 2009.

FSA v Shillaker 9/6/10

Mon, 28 Jun 2010 16:45:09 GMT

The FSA banned an insurance broker, Adrian Shillaker of Griffiths McAlister Insurance Brokers Ltd, for transferring client money to a business account to fund business expenses. The FSA has also cancelled the Part IV permission granted to the company.

FSA v Way 9/6/10

Mon, 28 Jun 2010 16:44:17 GMT

The FSA fined Mr Delwyn Way, a director of Shield Insurance Consultancy Ltd, £77,957 for embezzling money and assets from a client account to fund business and personal expenses. Mr Way was banned from working in financial services.

PPI complaints to the Ombudsman 28/5/10

Mon, 28 Jun 2010 16:43:56 GMT

The FSA announced a temporary rule to give customers who recently made a complaint about their purchase of a Payment Protection Insurance policy more time in which to refer their complaint to the Financial Ombudsman Service. The rule suspends the six month time limit for referring complaints to the Ombudsman and will run for five months until 27 October 2010 and applies to PPI complainants who have been sent a final response from a firm between the dates of 28 November 2009 and 28 April 2010. This has been done to ensure that complainants are not time barred from benefiting from the FSA’s current work to achieve a long term solution to the complaints process for PPI complainants.

FSA v Masi 4/6/10

Mon, 28 Jun 2010 16:42:53 GMT

The FSA banned sole trader Joseph Masi trading as Select Mortgage Services for breaching a settlement agreement with the FSA and providing the FSA with false and misleading information. In March 2009 Mr Masi had told the FSA that only one regulated mortgage application had been completed in the previous six month period. FSA investigations revealed that 18 applications had been completed and submitted. The FSA further obtained information that at least 48 regulated mortgage applications had been submitted during the relevant period, although a large number did not proceed to completion.

FSA v Rowan Dartington & Co Ltd 7/6/10

Mon, 28 Jun 2010 16:42:26 GMT

The FSA fined Rowan Dartington £511,000 for client money breaches. The firm had failed to properly test and implement a new software system for client assets in May 2007 which led to a breakdown in its reconciliation processes. In addition between May 2007 and September 2009 Rowan Dartington placed clients’ money at risk by failing to segregate client money for contingent liability business, including spread bets and options and failed to ensure it had the correct trust letters from its banks and counterparties.

FSA v Close Investments Limited 7/6/10

Mon, 28 Jun 2010 16:42:02 GMT

The FSA fined Close Investments Limited £98,000 for failing to protect and segregate client money properly between January 2008 and January 2010. Close had failed to hold client money in segregated accounts with trust status and to implement and maintain adequate controls over its client money as required by FSA rules.

FSA v Bunn 25/5/10

Mon, 28 Jun 2010 16:41:39 GMT

The FSA prohibited Mr Bunn, a former broker at Lewis Charles Securities Limited from performing any function in relation to any regulated activity on the grounds that he is not a fit and proper person with effect from 25 March 2010. Mr Bunn was permitted to trade on behalf of clients on a ‘matched basis’ i.e. earning income on the spread basis. He was not authorised to take proprietary positions on behalf of Lewis Charles. Mr Bunn entered in to large unmatched proprietary trades on behalf of Lewis Charles and then created false deal-slips to mislead the firm that the trade was matched. The trades lost Lewis Charles £2,670,000 due to movements in the price of the shares.

FSA v Cameron 18/5/10

Mon, 28 Jun 2010 16:41:15 GMT

The FSA announced a settlement on its investigation in to Johnny Cameron, former Executive Director of the Royal Bank of Scotland Group plc and former Chairman of Global Markets whereby Mr Cameron undertook not to perform any significant influence functions in relation to any regulated activity carried on by any authorised person, exempt person or exempt professional firm; or any further full time employment in the financial services industry in return for the FSA not taking disciplinary action against Mr Cameron. Mr Cameron is permitted to engage in part time consultancy work provided that the work does not involve performing activities which would require approval for a significant influence function. Absent the undertaking the FSA’s intention was to seek to prohibit Mr Cameron on the basis that he would not meet its current standards for approval for a significant influence function.

FSA v White 25/5/10

Mon, 28 Jun 2010 16:40:31 GMT

The FSA banned John White, the former Settlements Manager at Seymour Pierce Limited from working in financial services for committing fraud. Between 2001 and 2006 the FSA found that Mr White stole a total of £152,372 from his employer and a number of its private clients and hid £145,000 in a dormant account that had been paid to Seymour Pierce in error.

FSA v Simon Eagle 20/5/10

Mon, 28 Jun 2010 16:40:09 GMT

The FSA fined Simon Eagle £2,800,000 and banned him from working in financial services following a complex and prolonged abusive scheme that deliberately set out to ramp up the share price of AIM listed Fundamental-E Investments (FEI) for his own benefit. The fine consists of a disgorgement of £1.3 m profit and a penalty of £1.5 m and is the FSA’s largest ever fine on an individual. Mr Eagle agreed with FEI’s shareholders to sell 85% of its issued shares with the intention that he would acquire 10% of them and sell on the remaining 75% Mr Eagle was paid a commission of £1,221,878 by the original shareholders. To achieve this Mr Eagle acquired an agency-only stockbroker, SP Bell Limited, to sell FHE shares to its clients generating demand for the stock and pushing its price up. Many of those clients were unaware of these purchases because the requirement for settlement of the purchases was deferred and the shares were rolled over between clients before settlement in brea ch of LSE rule 3050 which permits one rollover trade on one occasion only. The volume of shares rolled over was 1.8 billion FEI shares and represented 80% of the total volume of trades in the relevant period. The rollover trades were reported to the market as ordinary trades giving a false and misleading impression as to the level of demand for FEI shares.

FSA v Kerr 2/6/10

Mon, 28 Jun 2010 16:39:44 GMT

The FSA fined a former commodity broker from Sucden Limited £100,000 for market abuse and banned him from working in the financial services industry. On 15 August 2007 Mr Kerr deliberately manipulated the market in London International Financial Futures and Options Exchange traded coffee futures and related coffee futures options. During his investigation Kerr provided the FSA with false and misleading information.

FSA v J.P. Morgan Securities Ltd 3/6/10

Mon, 28 Jun 2010 16:39:17 GMT

The FSA levied its largest ever fine of £33,320,000 against JP Morgan for failing to protect client money by segregating it appropriately from the firm’s money. Following its merger with Chase, between 1 November 2002 and 8 July 2009, JP Morgan failed to segregate the client money held by its futures and options business. The client money balance varied between $1.9 billion and $23 billion and had the firm become insolvent at any time the client money would have been at risk of loss.

FSA v Alpari and Chattopadhyay 5/5/10

Thu, 20 May 2010 19:48:19 GMT

The FSA imposed a penalty of £140,000 on Alpari (UK) Ltd for failing to have in place adequate anti-money laundering systems and controls in its online foreign exchange services for speculative trading. Alpari’s former money laundering reporting officer was fined £14,000.

FSA v Integrity Financial Solutions Limited 12/5/10

Thu, 20 May 2010 19:47:58 GMT

The FSA publicly censured Integrity for failings in its role as a product provider and adviser of geared traded endowment policies. The FSA waived a fine of £350,000 it would have imposed because the firm is in voluntary liquidation and the money should go to meet customer claims in respect of the product. The FSA found that Integrity’s IFA practice had failed to communicate adequately why a GTEP product was suitable for a customer and the risks associated with it and had failed to gather or record adequate KYC information, other product research and client risk attitude. In relation to Integrity’s role as a product provider the firm failed to ensure that promotional material explained the product clearly.

FSA v Robin Bradford (Life and Pension Consultants) Ltd 16/4/10

Thu, 20 May 2010 19:47:35 GMT

The FSA fined Robin Bradford, a London based IFA firm, £24,500 for exposing customers to unacceptable levels of risk of receiving poor pension switching advice in the period 6 April 2006 to 21 April 2008. The firm failed to obtain and record relevant information from its customers to assess whether advice was suitable, and failed to include relevant information in suitability letters to help customers make an informed choice in the decision to switch pensions. The firm is reviewing its advice during the period to see whether any redress is required.

FSA v Hythe and Mehta 14/4/10

Thu, 20 May 2010 19:47:16 GMT

The FSA fined Hythe £200,000 for failing to take reasonable care to organise and control its affairs responsibly and effectively with adequate risk management systems in respect of the sale of small cap and penny shares on AIM and PLUS markets and contracts for difference to individual investors. Hythe was found to have failed to treat customers fairly; failed to communicate information to customers in a way which was clear, fair and not misleading; and failed to take reasonable care to ensure the suitability of its advice. Hythe’s acting chief executive and senior manager Mr Mehta was prohibited from performing any significant influence function in a firm which undertakes any regulated activity with a view to transactions in penny shares in relation to retail customers and fined him £35,000.

FSA v Commerzbank AG 27/4/10

Thu, 20 May 2010 19:46:53 GMT

Following on from its fines earlier in April against Credit Suisse, Getco Europe Limited and Instinet Europe Limited for failures in transaction reporting, the FSA fined Commerzbank AG £595,000 for failing to provide accurate transaction reports over the course of two years despite the FSA sending reminders to firms of their obligations to provide accurate data and the importance of compliance with FSA rules on transaction reporting and specific requests of Commerzbank to check its data. The fine was reduced from £850,000 by 30% to reflect Commerzbank’s full co-operation in the course of the investigation and agreement to settle at an early stage.

FSA v David Baker and Richard Barclay 13/4/10

Thu, 20 May 2010 19:45:40 GMT

The FSA prohibited David Baker, Northern Rock’s former deputy chief executive, from performing any function in relation to any regulated activity and fined him £504,000 for failing to report internally the omission of nearly 2,000 loans from Northern Rock’s mortgage arrears figures and agreeing on a course of action which resulted in the loans not being reported. Mr Baker was found also to have made misleading statements to external stakeholders including market analysts. Had the true state of affairs been made public it would have increased the reported arrears figures by approximately 50%. Richard Barclay, the managing credit director of Northern Rock’s debt management unit, was also prohibited and fined £140,000. The fine was reduced from £300,000 to reflect a 30% reduction for early settlement and Mr Barclay’s personal financial hardship. Mr Barclay was found to have failed to establish and oversee effective systems and controls and to demonstrate due care, sk ill and diligence in managing his units commensurate with his CF 17, 19 and 29 functions. In particular Mr Barclay knew that Northern Rock’s arrears position was being manually adjusted at the discretion of staff and that there was no independent system to check this. Although the FSA was unable to calculate the exact extent of his mis-reporting of accurate management information concerning loan arrears and property possessions it found that had the correct figure been reported to senior management within Northern Rock the arrears figures would have been significantly worse and closer to the Council of Mortgage Lenders average. The FSA found that there was no evidence that Mr Baker or Mr Barclay had financially benefited from the conduct complained of or that it was a motivating factor for the misconduct.

R v Whitehead April 2010

Thu, 20 May 2010 19:44:54 GMT

Graham Whitehead was sentenced of 10 years imprisonment after pleading guilty to 49 counts of fraud and obtaining money by deception in a £12,000,000 pyramid fraud over five years. The scheme involved two fake schemes. The first involved clients being told that their money was being invested in high-interest-bearing loans and bonds with Credit Suisse. In the second clients were told that they were investing in short-term bridging loans to buy property in the UK.

FSA v Smith, Phillips, Sharma and Apicella 30/4/10

Thu, 20 May 2010 19:44:20 GMT

The FSA banned three mortgage brokers from working in regulated financial services and fined another individual £17,500. Mr Smith, a director of Andrew Copeland Mortgages Limited, had his approval to perform management functions withdrawn and was fined £17,500 for systems and controls failings leaving 224 customers exposed to the risk of receiving unsuitable advice and left the firm open to abuse by mortgage fraudsters. Mr Phillips of Lancaster House Mortgages was banned for submitting nine mortgage applications using false employment information and inflated salary figures. Mr Sharma of Ash Commercials (UK) Limited was found to be not fit and proper having submitted applications for two customers with obvious discrepancies and providing mortgage advice when not qualified to and for failing to provide the FSA with a report from a third party as required. Mr Apicella was banned for lack of competency for leaving his business open to the risk of involvement in financial crime.

FSA v Lester, Hutcheson and Winer 12/4/10

Thu, 20 May 2010 19:43:57 GMT

The FSA prohibited mortgage broker Gary Lester and fined him £103,000 for knowingly submitting 42 mortgage applications to lenders containing false and misleading income information and committing mortgage fraud to obtain a mortgage for himself. The FSA also prohibited two other mortgage advisers working for Lifestyle Mortgages Limited in Edgware for not appropriately scrutinising and challenging the information provided by customers on their mortgage application forms.

FSA v Patel and Chhabra 16/4/10

Thu, 20 May 2010 19:43:00 GMT

The FSA fined Mr Patel and Mr Chhabra £95,000 for market abuse and ordered Mr Patel to pay a further £85,541 representing the profit he made from spread betting on the basis of inside information provided to him by Mr Chhabra, a research analyst at Evolution Securities. The FSA also prohibited both.

FSA v Atlantic Law and Greystoke 13/05/10

Thu, 20 May 2010 19:41:48 GMT

Atlantic Law approved advertisements for unauthorised Spanish firms which offered investors free research reports in companies in which they owned shares. Anyone accepting the report authorised the Spanish firms to make telephone contact. The Spanish firms then conducted high pressure selling of high-risk illiquid shares to those investors. The Financial Services and Markets Tribunal upheld the FSA’s decision that the promotions were not clear, fair and not misleading because they disguised the true purpose of the communication and this was known to Atlantic Law and its senior partner Mr Greystoke. The FSA prohibited Mr Greystoke permanently from working in any capacity in financial services and fined him and Altantic Law LLP, a FSA regulated law firm of which he is senior partner at total of £400,000 for recklessly signing off approval of 50 UK investment advertisements between December 2005 and March 2007.

FSA v Kensington Mortgage Company Limited 12/4/10

Thu, 06 May 2010 18:26:07 GMT

The FSA fined Kensington Mortgage Company Limited £1,750,000 for poor treatment of some customers facing mortgage arrears reduced by 30% to £1,225,000 for early settlement. The FSA identified the following failures: failing to ensure mortgage servicing staff acting on its behalf had adequate understanding of treating mortgage arrears customers fairly; concentrating on the repayment of mortgage arrears over a short period of time rather than agreeing an arrangement to pay the arrears based on the customer’s individual circumstances; applying the following excessive / unfair charges to customer’s accounts: a fee for a returned direct debit which was charged regardless of how many times the direct debit had already been returned unpaid; an excessive fee for cancelled direct debits which did not reflect administrative costs; and an early repayment charge on mortgage balances which included arrears fees and charges within that balance.

R v Calvert 11/3/10

Wed, 24 Mar 2010 17:46:56 GMT

The FSA’s prosecution of Mr Calvert succeeded leading to a sentence of 21 months imprisonment.

FSA v Stenfors 16/3/10

Wed, 24 Mar 2010 17:46:29 GMT

The FSA prohibited Mr Stenfors, a Merrill Lynch trader on the short-term interest rate trading desk, from performing any function in relation to any regulated activity after he mispriced his positions on interest rate swaps over the course of a month to conceal his losses. The FSA indicated that in the absence of any new factors it would be minded to remove the prohibition order after a period of five years. Mr Stenfors co-operated fully with his employers and the FSA when the issues came to light.
Insider dealing

FSA v MacAulay and Dele MacAulay Financial Services 2/3/10

Wed, 24 Mar 2010 17:46:01 GMT

Following the sentence of Mr MacAulay to 21 months in prison for mortgage fraud, the FSA published its final notices in respect of its fine imposed in June 2009 when the FSA fined the mortgage broker £115,157 for knowingly submitting nine fraudulent mortgage applications for himself, his wife and his brother and for submitting false tax information to the FSA in his Retail Mediation Activities Return. The FSA also banned Mr MacAulay from working in regulated financial services.

FSA v RSM Tenon Financial Services Limited 24/02/2010

Wed, 24 Mar 2010 17:45:24 GMT

The FSA fined Tenon £700,000 for significant failings in its advice and sales processes relating to Lehman-backed structured products, and for having poor systems and controls to prevent unsuitable advice in its structured product and pension switching business. The fine represents a 30% discount for early settlement. In addition Tenon is required to conduct a past business review of all its sales of Lehman-backed structured products. Customers who received unsuitable advice will be able to sell their product to Tenon and have their money reimbursed plus interest. Tenon will also review sales of other structured products between 1 November 2007 and 1 December 2009 and provide redress where appropriate and review pension switching business transacted between 6 April 2006 and 1 December 2009 and carry out redress. Finally Tenon is required to instruct a skilled person to undertake a review of its current sales and compliance processes relating to the sale of all investment products, to assess their a ppropriateness and the suitability of recommendations made to customers. The FSA found that between November 2007 and August 2008 Tenon failed to treat some of its customers fairly and breached Principle 3 of the FSA’s Principles for Business by failing to take reasonable care to organise and control its affairs responsibly and effectively and Principle 9 by failing to take reasonable care to ensure the suitability of its advice to its customers.
Prohibition

FSA v Charles Palmer 3/3/10

Wed, 24 Mar 2010 17:44:51 GMT

The FSA fined the director of Gloucestershire based IFA network, Financial Ltd, £49,000 for management failings which resulted in poor compliance monitoring on pension switching advice during a period of rapid expansion in the period April 2006 to August 2008. The fine represented a 30% reduction in penalty for early settlement. Financial Ltd was one of 30 firms visited by the FSA in its thematic review of pension switching advice. The FSA concluded that Mr Palmer had failed to (a) establish and maintain a clear and appropriate reporting structure to ensure senior management understood and carried out their responsibilities for monitoring the network’s advisers; (b) ensure the firm complied with rules and requirements to ensure that pension switching advice was demonstrably suitable; and (c) ensure that the firm recruited sufficient and adequate compliance and support staff during a period of rapid expansion of the firm’s network of advisers. The company agreed to carry out a past busi ness review which may lead to customer redress if it is found that unsuitable advice was given.

FSA v Jones trading as Red Loans and Mortgages 15/3/10

Wed, 24 Mar 2010 17:39:17 GMT

The FSA cancelled the permission of Ms Jones on the basis that she had failed to pay fees and levies of £1,349.71 owed to the FSA despite requests to do so and had thereby failed to conduct her business soundly and prudently in compliance with proper standards and was accordingly not a fit and proper person.

FSA v G&W 5 Limited 1/3/10

Wed, 24 Mar 2010 17:38:36 GMT

Failing to pay FOS award. The FSA cancelled the permission of this IFA for failing to comply with an award made by the Financial Ombudsman Services despite repeated requests by FOS and the FSA to do so and thereby breaching Principle 6 of the FSA’s Principles for Businesses in not paying due regard to interests of its customer or treating him fairly; failing to ensure it had an approved person controlling its affairs in breach of Principle 3 (Management and Control); and failing to respond adequately to the FSA’s requests for information regarding its governing body and has failed to notify the FSA of any alternative arrangements despite requests to do so in breach of Principle 11 (Relations with regulators).
Failing to pay FSA fees

FSA v Semperian Limited Partnership 17/2/10

Wed, 24 Feb 2010 23:11:22 GMT

Semperian pleaded guilty to an offence under s. 191 (3) of FSMA 2000 by acquiring an authorised firm before it had received the necessary approval of the FSA. The firm was fined £1,000 on the basis that it had taken a calculated risk.

FSA v Sepil & Ors 16/2/10

Wed, 24 Feb 2010 23:10:48 GMT

The FSA fined the chief executive of Genel Enerji £967,005 and its chief commercial officer and exploration manager £105,240 and £94,062 respectively for market abuse following trades made after discovery of drilling results in a joint venture agreement before these results were made known to the wider public. The fine against Mr Sepil is the largest ever fine imposed by the FSA against an individual for market abuse.

FSA v Direct Sharedeal Limited 18/2/10

Wed, 24 Feb 2010 23:09:31 GMT

The FSA fined a stock broking firm £101,500 after its appointed representative, First Colonial Investments LLP, used misleading sales pitches which failed to set out the inherent risks of buying penny shares.

FSA v Treacher

Wed, 24 Feb 2010 23:02:13 GMT

The FSA banned a senior hedge fund manager from working and fined him £140,000 for inflating the value of his positions by pasting false figures over legitimate brokers’ quotes. The fine represented a reduction for early settlement and mitigating factors including personal problems.

FSA v Emelife 4/2/10

Wed, 24 Feb 2010 23:01:45 GMT

The FSA banned a mortgage intermediary for knowingly submitting mortgage applications to lenders that contained false and misleading income information.

FSA v Byrne 15/2/10

Wed, 24 Feb 2010 23:01:00 GMT

The FSA banned a mortgage broker for lacking the integrity and competence to prevent his business being targeted by mortgage fraudsters.

FSA v Sixsmith 5/2/10

Wed, 24 Feb 2010 22:59:50 GMT

The FSA banned the director of a mortgage and general insurance firm from holding senior positions in the financial services industry after his failure to comply with client money rules resulted in the loss of approximately £85,000 of his customers’ money.

FSA v Wills & Co 17/2/10

Wed, 24 Feb 2010 22:58:58 GMT

The FSA censured Wills & Co for poor sales practices and not monitoring its advisers properly despite a fine and a previous requirement to take remedial action and for failing to handle customer complaints properly. The FSA would have fined Wills & Co £1,500,000 had it not been in the process of winding down its business.

FSA v Standard Life Assurance Limited 20/1/10

Wed, 24 Feb 2010 22:58:20 GMT

The FSA fined Standard Life Assurance Limited £2.45 m for serious systems and controls failings that resulted in the production of misleading marketing material for its Pension Sterling Fund and subsequent failure to carry out a prompt and full investigation of concerns arising out of the marketing material. The marketing material referred to the fund being wholly invested in cash when the majority was invested at the relevant times in Floating Rate Notes leading to customers not being told as to the true risk of capital losses which was of great importance given that it was intended primarily for the investment of pensions. The fine represented a 30% reduction on the initial penalty to reflect co-operation with the FSA and early settlement.

FSA v Fabien Risk Services Limited (05 January 2010)

Thu, 04 Feb 2010 15:53:36 GMT

The FSA banned another director, Stephen Allen, of the insurance brokers Fabien Risk Services Ltd, for failing in his oversight duties of handling client money. In late 2005 the company was placed in creditors’ voluntary liquidation, the company had suffered £700,000 in losses, of which £470,000 was owed to insurers, brokers and underwriters. The client account held a significant shortfall of only £8,500. The FSA had previously found that one of the co-directors of the company had deliberately misappropriated clients’ money in order to keep the company trading and had concealed the improper use of client money.

FSA v Trinity Network Services Limited (12 December 2009)

Thu, 04 Feb 2010 15:53:05 GMT

On 12 January 2010 the FSA cancelled the Part IV permission of Trinity Network Services Ltd. The FSA has also deemed Mr Oladipupo, who is the sole proprietor of the mortgage mediation business not a fit and proper person to hold a regulated position. In November and December 2008, during an FSA investigation into Mr Oladipupo’s conduct, he failed to attend a compulsory interview and to provide the FSA with requested documents and information. As a result of his failure to deal with the FSA in an open and co-operative way, the FSA removed his approval to perform a controlled function.

FSA v iSOFT Group plc (06 January 2010)

Thu, 04 Feb 2010 15:52:40 GMT

The FSA announced that four former iSOFT Group plc directors (Patrick Cryne, Stephen Graham, Timothy Whiston and John Whelan) have been charged with conspiracy to make misleading statements contrary to s 397(1)(a), (2) of the Financial Services and Markets Act 2000 and s.1 of the Criminal Law Act 1977. The four individuals are have been summoned to appear at City of Westminster Magistrates Court on 29 January 2010.

FSA v James Shanks (18 December 2009)

Thu, 04 Feb 2010 15:52:18 GMT

The FSA decided to make an order prohibiting Mr Shanks from performing any controlled functions in relation to a regulated company. He acted as a mortgage adviser and processed mortgage applications containing false and misleading information. Mr Shanks failed to obtain documentary evidence to support the declared income of mortgage applicants which had been inflated for the purposes of obtaining a mortgage.

FSA v Case Funding Centre (18 December 2009)

Thu, 04 Feb 2010 15:51:00 GMT

The FSA imposed a financial penalty of £35,000 on Case Funding Centre (CFC), a mortgage intermediary company, for failing to employ a skilled person to review its systems and controls in relation to financial crime risks.

FSA v Toronto Dominion Bank (London Branch) (15 December 2009)

Thu, 04 Feb 2010 15:50:29 GMT

The FSA imposed a fine of £10 million on Toronto Dominion, subsequently reduced by 30% to £7 million for early settlement, with respect to repeated breaches of the Principles 2 (by failing to conduct its business with due skill, care and diligence) and 3 (by failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems). A key factor contributing to the seriousness of this case is that Toronto Dominion had already been the subject of previous FSA Enforcement action for failings in its systems and controls concerning the pricing of financial products by one of its traders. In November 2007 Toronto Dominion was fined £490,000 (discounted from £700,000 for early settlement) for a breach of Principle 3 concerning systems and controls failings in relation to one of its trading books. The matter occurred when a fixed income trader, Simon Brignall, attributed false values to his trading positions and created fictiti ous trades to hide significant losses on his trading book. This resulted in a loss to Toronto Dominion of CAD $8.8 million. In determining the financial penalty, the FSA took into account mitigating factors, including the fact that Toronto Dominion informed the FSA and promptly ensured public disclosure when it became aware of the problem in June 2008.

FSA v Nighat Mirza (16 December 2009)

Thu, 04 Feb 2010 15:49:56 GMT

On 16 December 2009 the FSA banned Ms Mirza, a partner of a mortgage brokerage KS Financial, for lacking competence and for failing to manage the firm’s affairs properly. Ms Mirza became an approved person in October 2004 and despite being a partner, she had little knowledge of KS Financial’s mortgage business or the firm’s regulatory requirements.

FSA v Simon Kuun (17 December 2009)

Thu, 04 Feb 2010 15:49:34 GMT

The FSA fined Mr Kuun, a director of MFP Group plc for lying repeatedly to the regulator, and banned him from the industry. The FSA found that he lacked the honesty and integrity expected of an approved person. He was fined £50,000. The case was then referred to the Financial Services and Markets Tribunal, who upheld the FSA's original findings, but increased the fine to £75,000 as Kuun had lied to the Tribunal when giving evidence.

FSA v Robin Chhabra & Sameer Patel (29 December 2009)

Thu, 04 Feb 2010 15:49:04 GMT

On 21 November 2008 the FSA imposed a penalty on Mr Chhabra and Mr Patel for market abuse and declared that the two individuals were not fit and proper persons to carry out controlled functions. On three separate occasions, Mr Chhabra became aware of important and confidential information about forthcoming announcements relating to Ebookers plc, an online travel company, and Eidos plc, a video and computer games company. Within minutes of getting the information, Mr Chhabra would call Mr Patel on his mobile phone. Shortly after the calls, Mr Patel placed spread bets on the Ebookers plc or Eidos stocks. The total benefit to Mr Patel from these bets was £85,541. The case was referred to the Financial Services and Markets Tribunal (Tribunal). The Tribunal decided to deal with the issue of liability first, particularly whether Mr Patel placed his bets in reliance on relevant information not generally available which had been disclosed to him by Mr Chhabra and to deal with the penalty at a later heari ng. The Tribunal upheld the decision of the FSA that all three bets had been placed in reliance on relevant information not generally available (namely the unscheduled announcement) and concluded that both Mr Chhabra and Mr Patel did engage in market abuse.

Office of Fair Trading (Respondents) v Abbey National plc & others Appellants), [2009] UKSC 6

Tue, 05 Jan 2010 12:51:35 GMT

Supreme Court Press Summary – 25 November 2009

Introduction
This appeal involved a relatively narrow issue. The Supreme Court had to decide not whether the banks’ charges for unauthorised overdrafts were fair but whether the OFT could launch an investigation into whether they were fair.

At present, banks provide retail banking services on the basis that customers whose accounts are kept in credit (in other words who lend money to the banks) will not be charged for the services provided; customers who have authorised overdrafts will be charged interest on the money that they borrow from the bank; and customers who incur unauthorised overdrafts will be charged, not only interest on the sums borrowed, but fixed fees for each particular service involved.

The OFT has power to assess the fairness of terms in consumer contracts but this is subject to the limits laid down in the Unfair Contract Terms in Consumer Contracts Regulations 1999, which implemented European Council Directive 93/13/EEC.

Regulation 6(2)(b) states that the assessment of the fairness of a term in a contract “shall not relate . . . to the adequacy of the price or remuneration, as against the goods or services supplied in exchange”. In other words, the “value for money” equation is excluded.

The Court of Appeal held that this exclusion applied only to the “core terms” of the contract and not to ancillary terms such as the charges for unauthorised overdrafts. The Supreme Court unanimously held that the charges for unauthorised overdrafts fell within this exclusion. They were part of the price paid by the customer for the banking services provided.

However, the charges might still be open to assessment by the OFT on other grounds under Regulation 5.

Background to the appeal
The Office of Fair Trading (‘the OFT’) wished to investigate the fairness, under the Unfair Terms in Consumer Contracts Regulations 1999 (‘the Regulations’), of the terms (‘the Relevant Terms’) in the Appellant banks’ contracts with customers imposing charges (‘the Relevant Charges’) on unauthorized overdrafts. The Regulations implemented European Council Directive 93/13/EEC. The OFT applied for a declaration that it was entitled to make such an investigation, notwithstanding Regulation 6 (2) (b) of the Regulations, which stated that the assessment of fairness of a term in a contract ‘shall not relate… to the adequacy of the price or remuneration, as against the goods or services supplied in exchange’. Both the High Court and the Court of Appeal decided that Regulation 6 (2) (b) did not stop the OFT from making such an investigation. The banks appealed.

Judgment
The Supreme Court unanimously allowed the appeal by the banks.

Reasons for the judgment
· Lord Walker made clear that the scope of the appeal was limited – the court did not have the task of deciding whether or not the system of charging current account customers was fair, but whether the OFT could challenge the charges as being excessive in relation to the services supplied in exchange (Paragraph 3). As Lord Phillips stated, even if such a challenge was not possible, it might still be open for the OFT to assess the fairness of the charges according to other criteria (Para 61).
· The key issue was whether the charges constituted the ‘price and remuneration’ as against ‘the goods or services supplied in exchange’ within the meaning of the Regulations. The Supreme Court considered and decided a number of arguments as to whether the charges could be said to be ‘price or remuneration’ under Regulation 6 (2) (b):
(1) The charges were not paid ‘in exchange’ for the transactions to which they related – eg. honouring a cheque when the customer had insufficient funds to do so (Para 75).
(2) The Court of Appeal was wrong to find that Regulation 6 (2) (b) did not apply to charges that were ‘ancillary’ to the core contract between the bank and customer (Paras 38-41, 47, 78, 112). Lord Walker commented that Regulation 6 (2) (b) contained no indication that only the ‘essential’ price or remuneration was relevant. In fact, any monetary price or remuneration payable under the contract would naturally fall within the language of Regulation 6 (2) (b) (Para 41).
(3) The charges were not concealed default charges designed to discourage customers from becoming overdrawn on their accounts without prior arrangement (Paras 88, 114). The High Court had rejected this argument and was right to do so.
(4) The charges were properly to be regarded as falling within the scope of the Regulations (Paras 43, 80, 104). They were in fact part of the price or remuneration paid by the customer in exchange for the package of services which made up a current account (Paras 47, 89). The fact that liability to pay the charges depended on specific events occurring was irrelevant to that conclusion (Paras 47, 104).
· Accordingly, since any assessment of the fairness of the charges, which related to their appropriateness as against the services supplied in exchange, fell within Regulation 6 (2) (b), no such assessment could take place and so the appeal would be allowed (Paras 51, 90, 92, 118, 119).

Further Comments
· Lord Phillips also noted that in the absence of the charges the banks would not be able profitably to provide current account services without a fee (Para 88). He stated that it might be open to question whether it is fair to subsidise some customers whose accounts always remain in credit by levies on others who experienced events they did not foresee when they opened their accounts (Para 80).
· Lord Walker commented that ministers and Parliament had decided to transpose the directive as it stood rather than to confer the higher degree of consumer protection afforded by the national laws of some other member states. Parliament might wish to consider whether to revisit that decision (Para 52). Lord Mance endorsed this comment (Para 118).
· Lady Hale commented that if Lord Walker’s invitation to ministers and Parliament was to be taken up, it might not be easy to find a satisfactory solution. She questioned whether the real problem was not the charging model, but the lack of competition between the banks as to the product they offered (Para 93).

No Reference to European Court of Justice
· The court decided that although the interpretation of the European directive which the Regulations implemented was a question of European law it was not necessary to refer the matter to the European Court of Justice (Paras 49, 91, 115, 120).

FSA v UBS (6 November 2009)

Thu, 03 Dec 2009 17:13:36 GMT

The FSA fined UBS £8 million for systems and controls failures in its private bank which allowed four private bankers to carry out up to 50 unauthorised trades a day across 39 client accounts between January 2006 and December 2007. The fine was reduced by 20% in return for the bank’s co-operation and an agreement not to appeal the penalty. UBS also paid US$ 42 million in compensation to its affected customers.

FSA v Uberoi (4 November 2009)

Thu, 03 Dec 2009 17:12:51 GMT

Matthew Uberoi and his father, Neel Uberoi, were found guilty of 12 counts of insider dealing under section 52 of the Criminal Justice Act 1993 at Southwark Crown Court. Their case was the second insider dealing prosecution brought by the FSA as part of its ongoing drive to tackle market abuse.

FSA v GMAC-RFC (27 October 2009)

Thu, 03 Dec 2009 17:12:03 GMT

The FSA ordered GMAC to pay a fine of £2.8 million and refund customers £7.7 million after finding the company guilty of unfair treatment of customers in arrears including excessive and unfair charges, failing to take into account individual circumstances and alternatives to repossession and of not having adequate training of staff. The fine was reduced by 30% to reflect early settlement.

FSA v Swinton Group Ltd (26 November 2009)

Thu, 03 Dec 2009 17:10:55 GMT

The FSA fined Swinton, the high street insurance broker, £770,000 and ordered it to offer refunds to 500,000 customers in respect of the sale of payment protection insurance. The FSA found that the cost of PPI was not sufficiently explained and that Swinton’s fees were not separated from the price or explained to the customers.

R (ex p. Equitable Members Action Group) v H.M. Treasury & Ors (Admin) (15 October 2009)

Thu, 03 Dec 2009 17:06:13 GMT

The government’s response to findings of the review of the regulatory supervision of the Equitable Life was in part flawed in that it had rejected findings of maladministration and injustice without cogent reasons. However the decision relating to a compensation scheme was one for the Government reporting to Parliament and not reviewable by the courts other than on grounds of irrationality.

Re Sigma Finance (SC)

Thu, 03 Dec 2009 17:05:18 GMT

Where a SIV was in liquidation, the terms of a distribution clause in a Trust Deed were to be construed in the overall context of the agreement and its commercial purpose. The wording of the particular clause for payments of sums ‘as they fell due’ assumed that all secured liabilities could be covered and no issue of priority arose. It was not appropriate to treat it in the different context of insolvency as creative effective priority for liabilities maturing in the short term over those in the long term. Where there were multiple parties to a contract the ‘background’ or ‘matrix of fact’ was not to be taken in to account in construing the document unless it was common to all parties.

FSA v John Jordan Complete Mortgage Services Limited (12 October 2009)

Mon, 02 Nov 2009 11:26:18 GMT

John Jordan Complete Mortgage Services (the firm) was considered by the FSA to have an unfit controller and did not have a competent and prudent management team. The FSA cancelled the Part IV Permission as the firm did not satisfy the Threshold Conditions set out in the FSA Rules and, therefore, was not considered to be fit and proper to conduct regulated activities.

FSA v Seymour Pierce Limited (08 October 2009)

Mon, 02 Nov 2009 11:23:05 GMT

Between 2003 and 2006 an employee in Settlements at Seymour Pierce Ltd was able to steal from internal and client accounts by transferring amounts to his personal account. The employee stole the money in thirty-six separate transactions without detection. The FSA imposed on the firm a financial penalty of £154,000 for failing to have adequate monitoring systems and controls in place to detect the fraud in breach of Principle 3 of the FSA Rules.

The FSA v Simon William Robins 05/06/09

Thu, 06 Aug 2009 15:05:15 GMT

The FSA has prohibited Simon Robins (Compliance Director of Chase UK Corporation Ltd) for failing to adequately supervise the operations of the firm. The FSA found that Mr Robins lacked competence and capability. He had failed to ensure that: (a) suitable advice had been given to its customers; (b) adequate systems and controls were in place to enable its mortgage advisory business to be controlled effectively; and (c) regulatory requirements and standards had been complied. As a result of these failings the firm was being used by third parties to obtain mortgage applications on a fraudulent basis. Accordingly, the FSA has prohibited Mr Robins from performing significant influence functions at any authorised financial firm.

The FSA v Guiliano Chianelli trading as GCM 03/06/09

Thu, 06 Aug 2009 15:04:13 GMT

The FSA cancelled the permission of Mr Chianelli trading as GCM for failing to conduct his business with integrity and in compliance with proper standards. His earnings as stated in his mortgage application were much higher than his income declared to HM Revenue and Customs for the same period. Mr Chianelli also failed to co-operate with the FSA by refusing to provide his customers’ mortgage files, thereby preventing the FSA from assessing whether he was also knowingly involved in the submission of false and misleading mortgage applications for his customers.

The FSA v Mr Abiola Agbalaya and Herald Finance Ltd and Ms Grace Olatunji 6 April 2009

Tue, 02 Jun 2009 19:33:00 GMT

Mr Agbalaya was an FSA approved person and the sole controller of Herald Finance Ltd (Herald) which operated in South London. The FSA fined Mr Agbalaya £100,000 and cancelled the Part IV permission of Herald for becoming involved in serious and blatant mortgage fraud. The FSA decided that they had failed to meet minimum regulatory standards in terms of honesty and integrity. Mr Agbalaya was also prohibited from performing any function in relation to any regulated activity carried out by any authorised firm. The FSA also imposed a ban on Ms Grace Olatunji for knowingly entering false information on mortgage application forms, and submitting mortgage applications to lenders based on information that Ms Olatunji knew to be false whilst she was working as a mortgage consultant for Herald.

The FSA v Mr Zia Chowdhury (ZXC01007) 30/04/09

Wed, 29 Apr 2009 22:00:00 GMT

The FSA made a decision to prohibit a mortgage adviser, Mr Chowdhury, based in Tower Hamlets for certifying fraudulent mortgage applications. He also operated his firm Express Financial without being approved by the FSA as required. The FSA was informed by three lenders that they had removed Express Financial from their panels of mortgage introducers due to concerns over the submission of false documentation in relation to mortgage applications being supported by fraudulent passports, bank statements and identity papers. The FSA said that Mr Chowdhury posed a risk to lenders and therefore also to the confidence in the financial system.

The FSA v Loic Albert Antoine Montserret (LAM01055) 28/04/09

Mon, 27 Apr 2009 23:00:00 GMT

The FSA has banned and fined Mr Montserret, a former portfolio manager at BlueCrest Capital Management Limited, £35,000 for deliberately mismarking his positions in an attempt to avoid losing his job over losses he was making on his trading book. Mr Montserret agreed to settle this matter early and, therefore, qualified for a 30% reduction in the financial penalty that was originally £50,000. The FSA found that Mr Montserret’s actions had distorted the intra-month value of the Fund. However, at the end of each month, all the positions in the Fund are valued by an independent administrator. The independent administrator calculates the Net Asset Value (“NAV”) of the Fund which is then sent to customers. Mr Montserret’s misconduct did not impact the accuracy of the independent month-end NAV of the Fund.

The FSA v Mohammad Rana (trading as Countrywide Management Consultancy and as Property Compass) 24 April 2009

Thu, 23 Apr 2009 23:00:00 GMT

On 6 May 2008, Mr Mohammad Rana trading as Countrywide Management Consultancy and as Property Compass (“Countrywide”) entered into a ‘Settlement Agreement’ with the FSA. Countrywide failed to comply with the terms of the Settlement Agreement and also failed to comply with rules that require the payment of regulatory fees and levies owed to the FSA. Consequently, the FSA has cancelled its Part IV permission.

FSA Implements Changes to Simplify Financial Services Compensation Scheme 24/04/09

Thu, 23 Apr 2009 23:00:00 GMT

On 24 April 2009, the FSA announced that it is to go ahead with proposed changes to the compensation limits for insurance, investment and home finance advice business in the event of a firm failing, designed to achieve greater simplicity and consistency in the Financial Services Compensation Scheme. The changes that will come into effect on 1 January 2010 mean the compensation limit for investments, home finance advice and deposits will be the same at £50,000 and all claims for non-compulsory insurance will be paid at 90 per cent, with no upper limit.

In the matter of Kaupthing Singer and Friedlander Ltd (Ch) 08/04/09

Tue, 07 Apr 2009 23:00:00 GMT

The legal right of set-off was permissive rather than mandatory and had been determined in HSBC v Kloeckner & Co and Coca-Cola Financial Corporation v Finsat International. Thus when a building society issued a certificate of deposit in accordance with the CREST rules and expressly provided that it was issued without any rights of set-off, the building society was not entitled to set-off unpaid certificates of deposits also issued under the CREST programme.

The FSA v Peter Dean (PFD01031) and James Dean (JFD01042) and UK Finance House Ltd (FRN 303117) 08/04/09

Tue, 07 Apr 2009 23:00:00 GMT

Peter and James Dean were mortgage brokers for UK Finance House Ltd (UKFH) based in Dorset. The FSA imposed a ban on the brokers for failing to prevent their firm from being used to perpetrate financial crime and for other serious regulatory failures. In addition, the FSA withdrew the approval of Peter Dean to perform the controlled functions: CF1- Director and CF8 - Apportionment Oversight and fined him £17,500 for failing to exercise due skill, care and diligence in managing the business of UKFH for which he was responsible. The FSA cancelled the Part IV permission of UKFH.

Financial Services Authority v McQuoid and Melbourne (27 March 2009)

Fri, 27 Mar 2009 18:20:00 GMT

The FSA’s first insider dealing criminal prosecution led to convictions of a solicitor and his father-in-law in respect of profits made from knowledge acquired in his position of General Counsel for TTP Communications in respect of a proposed take-over of the company. The FSA obtained a court order freezing the profits made from the trade. Both received sentences of imprisonment, the father-in-law’s sentence being suspended.

Financial Services Authority v Ashfad Ahmed trading as Eastside Mortgages 25 March 2009

Wed, 25 Mar 2009 17:27:00 GMT

The FSA banned Ashfad Ahmed from performing any function in relation to any regulated activity. He had also traded as Dockside Mortgages. Mr Ahmed had submitted two mortgage application forms for himself through Eastside Mortgages providing false and misleading information about his self-employed income. The FSA decided that Mr Ahmed had failed to conduct himself with honesty and integrity.

Financial Services Authority v Mortgages Remortgage Ltd (24 March 2009)

Tue, 24 Mar 2009 18:23:00 GMT

The FSA publicly censured a mortgage broking firm for failing to ensure it provided suitable advice and exposing up to 80 of its customers to the risk of being sold an unsuitable self-certified mortgage.

Financial Services Authority v Aspray Limited (19 March 2009)

Thu, 19 Mar 2009 18:24:00 GMT

The FSA fined a broker specialising in managing insurance claims for property repairs £21,000 for not maintaining appropriate systems and controls for the recruitment, training and monitoring of appointed representatives; for misleading clients by telling them that its services were free of charge when cancellation charges could be incurred and appointed representatives had a discretion to charge an insurance excess and that all its contractors were screened and only quality local tradesmen were used; for failing to inform customers about the Financial Ombudsman Service; and for misleading the FSA in claiming that the firm had made compliance visits to all its appointed representatives, made financial checks on them and reviewed their files when it had in fact performed none of those procedures. The value of the penalty represented a 30% discount for early settlement.

Financial Services Authority v Abiona (11 March 2009)

Wed, 11 Mar 2009 17:26:00 GMT

The FSA found that Mr Abiona knowingly submitted mortgage applications containing false or misleading information to lenders on his own and his customers’ behalf. Mr Abiona also failed to protect confidential customer information; to ensure file reviews were adequately carried out and recorded; and to make sure that information on mortgage application forms was not misleading. Mr Abiona was banned.

Reforming Financial Regulations 21/1/09 FSA/PN/013/2009

Wed, 21 Jan 2009 00:00:00 GMT

The Chairman of the FSA (Adair Turner) said recently that three reforms are being proposed to financial regulations. These are: (1) new approaches to capital adequacy, entailing more capital held against risky trading strategies and counter-cyclical capital requirements to build up adequate buffers during good economic times, which can be drawn on in bad; (2) a new liquidity regime focused not just on individual firms’ liquidity but also on market-wide risk; and (3) ensuring that financial activity is regulated according to its economic substance not its legal form. It was suggested that these proposed changes are needed to create a banking system focused on the delivery of the value-added functions of banking which are essential to a sound market economy.

FSA Short Selling Rules 16/1/09

Fri, 16 Jan 2009 00:00:00 GMT

The FSA is considering whether to extend disclosure of short selling to all companies publicly traded in the UK. It has decided to relax an outright ban on short selling banking stocks which had been in force since September 2008; from 16 January 2009 investors are allowed to short sell banking shares provided that they disclose it. The FSA is now consulting about whether to extend disclosure to cover every quoted company.

The Coroners and Justice Bill 15/1/09

Thu, 15 Jan 2009 00:00:00 GMT

The Coroners and Justice Bill was published on 15 January 2009 and includes a proposal that the FSA can grant immunity and other protections to witnesses in criminal investigations by an amendemnt to the Serious Organised Crime and Police Act 2005. The power is expected to come into force in late 2009 or early 2010.

FSA v Erik Boyen 12/1/09

Mon, 12 Jan 2009 00:00:00 GMT

The FSA fined a Belgium based private investor £176,254 for dealing in the shares of Monterrico Metals Plc an AIM-quoted company on the basis of inside information. The fine represents a disgorgement of profit of £127,254 and an additional penalty of £49,000 (discounted by a third to reflect an early settlement). Mr Boyen was an experienced investor. His brother had received a request from an executive involved in takeover discussions to acquire shares in Monterrico on his behalf. Knowing this Mr Boyen bought shares for his brother and on his own account and encouraged a third party to deal in these shares.

FSA v Rollins 7/1/09

Wed, 07 Jan 2009 00:00:00 GMT

The FSA has continued to bring criminal prosecutions for insider dealing. Earlier this month it brought proceedings against Neil Rollins. He is charged with five counts of insider dealing and four counts of money laundering; it is alleged he sold more than 73,000 shares in PM Group in August and September 2006 with the benefit of inside information.

FSA v AON Ltd 6/1/09

Tue, 06 Jan 2009 00:00:00 GMT

The FSA imposed its largest financial crime-related fine ever on broker Aon over a series of systems and controls failings regarding payments made to overseas third parties. The fine of £5.25m was in respect of the absence of appropriate anti-bribery and corruption systems and controls in respect of foreign business.

Barnsley Building Society and Yorkshire Building Society 23/12/08

Tue, 23 Dec 2008 00:00:00 GMT

The FSA confirmed its decision that with effect from 31st December 2008 the transfer of engagement of the Barnsley BS to the Yorkshire BS under s.95 of the Building Society Act 1986. Having regard to the information available, the FSA confirmed that the merger would not affect the interests of the members of the BarnsleyBS. The assets of the Yorkshire BS being 54 times larger than those of the Barnsley BS. The FSA found that the transfer of engagements would not result in the members of the Barnsley BS being unreasonably prejudiced by the transfer.

FSA v Lawrence t/a Shaun Lawrence (“the Firm”) 19/12/08

Fri, 19 Dec 2008 00:00:00 GMT

The FSA had requested certain information from the Firm. When the FSA reviewed this information they discovered that the some of the files had missing documents. In some cases, the information received was insufficient and other cases it contained false facts. An example given was that a customer who was in fact unemployed was stated on the mortgaged application to the lender as being self-employed with a profiable business since 2004. The FSA found that, amongst other things, the Firm had failed to act with competence, capability, honesty, integrity and had demonstrated a serious lack of compliance with the regulatory standards. The FSA cancelled the Firm’s authorisation.

FSA v Bowden t/a Scott Jarrett Bowden & Partners (“SJB”) 19/12/08

Fri, 19 Dec 2008 00:00:00 GMT

The FSA found that Bowden was not fit and proper to perform functions in relation to his capacity as sole trader and mortgage advisor to SJB. Neither Bowden nor SJB had established or maintained appropriate control arrangements to ensure that they were providing suitable advice to customers. The FSA also found that the lack of training meant that SBJ’s customers were exposed to unacceptable risk that the advice given was from untrained or incompetent advisors. Therefore, the FSA decided to to exercise its powers to make a order prohibiting Bowden and SJB from performing any function in relation to any regulated activity.

FSA v Shanti 11/12/08

Thu, 11 Dec 2008 00:00:00 GMT

In the first case of its kind, the FSA prosecuted Mr Shanti and Chase Capital Finance Limited for falsely claiming to be authorised to carry out regulated financial services. Mr Shanti and Chase Cpaital Finance had placed advertisements in the BT Telephone Directory and Yellow Pages claiming that Chase was authorised by the FSA. The magistrate’s court fined Mr Shanti £35,000 and Chase Capital, which is no longer trading, £1,000.

FSA v Egg 10/12/08

Wed, 10 Dec 2008 00:00:00 GMT

The FSA fined Egg £721,000 for serious failings on the sales of credit card payment protection insurance to about 40% of its customers between January 2005 and December 2007. The failings included the over-emphasising of the positive features of PPI or telling the customer that they could take the PPI for a free period and cancel it later if they did not want it. In some cases, even though declined, PPI was applied to the credit card in any event.

FSA v Ralph and Boyen 13/11/08

Thu, 13 Nov 2008 00:00:00 GMT

The FSA impoesed fines of £117,691.41 and £81,982.95 in respect of insider dealing which took place when the chairman of Monterico Metals requested a friend to purchase shares on his behalf while the company was in takeover talks. While the talks were publicly known the use of a third party to purchase the shares meant avoiding public disclosure of the acquisition of shares. These fines had been reduced by 30% to represent early co-operation and settlement.

FSA v Chase De Vere 11/11/08

Tue, 11 Nov 2008 00:00:00 GMT

The FSA fined AWD Chase De Vere Weath Management £1.12 million in respect of pensions. The FSA concluded that at least 800 people had been badly advised between February 2006 and October 2007 when they were advised to purchase products that were unsuitable because cover already existed within their previous policies and there weas inadequate disclosure of the risks. As part of the settlement Chase De Vere has agreed to make compensation payments by August 2009.

FSA Scrutiny over Retail Operations 5/11/08

Wed, 05 Nov 2008 00:00:00 GMT

The FSA has commenced a consultation on the extension of its regulatory remit to cover areas of banking conduct currently subject to the Banking Code Standards Board. The FSA’s proposed remit would stretch to cover current accounts, personal loans, savings, card services and cash machines currently overssen by the Banking Code.

FSA v Sindicatum Holdings Ltd 29/10/08

Wed, 29 Oct 2008 00:00:00 GMT

The FSA fined SHL £49,000 and its money laundering officer £17,5000 for not having adequate money laundering systems and controls in place for verifying and recording clients’ identities.

FSA v Knowlden Titlow Financial Services Ltd 9/10/08

Thu, 09 Oct 2008 00:00:00 GMT

The FSA fined the above firms £35,000 and £10,500 respectively for failures relating to the sale of geared traded endowment policies. The FSA also cancelled the permission of two individuals associated with the firms. Probles identified by the FSA included a failure to ensure that all advisers fully understood the policies and their risks before recommedning them; failed to gather enough information about customers to support and ensure the suitabilty of its recommendations or to explain the risks.

FSA v Alliance & Leicester 7/10/08

Tue, 07 Oct 2008 00:00:00 GMT

The FSA fined A&L £7,000,000 for mis-selling 210,000 payment protection insurance policies to people seeking personal loans between January 2005 and December 2007. Customers were not given sufficient details as to the cost of the policies and insufficent regard was had to the needs of the customers.

FSA v Worthington and Millington 30/9/08

Tue, 30 Sep 2008 00:00:00 GMT

The FSA imposed financial penalties of £150,000 each on two directors of Lifestyle Finance Limited for failing to make sure that their business had the appropriate compliance and sales procedures in place in relation to suitable mortgage advice to customers. However, given that Mr Millington was made bankrupt in October 2007 and Mr Worthington was made bankrupt in December 2007, they have agreed with the FSA not to apply for positions with controlled functions involving significant management influence in the future. http://www.fsa.gov.uk/pubs/final/m-worthington.pdf and http://www.fsa.gov.uk/pubs/final/d-millington.pdf

FSA v Jones 30/9/08

Tue, 30 Sep 2008 00:00:00 GMT

The FSA has fined a mortgage broker, Stephen Jones, £100,000 and also banned him after finding that he had exposed approximately1,500 customers to the risk of receiving unsuitable advice and the possibility of losing money. The FSA announced that “...Mr Jones's fraudulent mortgage application and his dishonesty in attempting to cover up regulatory failings were completely unacceptable warranting a ban and a large financial penalty.”

FSA v Hussain 23/9/08

Tue, 23 Sep 2008 00:00:00 GMT

The FSA cancelled Mr Hussain’s authorisation and prohibited him carrying out any regulated activities because of the threat he posed to consumers. Mr Hussain traded as Lifestyle Ealing as a mortgage broker on a sole trader basis. The FSA was notified by a lender of a number of discrepancies in relation to different mortgage applications suggesting the use of false and misleading information. Further enquiries led to the discovery that Mr Hussain had applied in his own name for a mortgage based on inflated earnings; had been conversely under declaring his income to HMRC; and had permitted to be submitted third party applications on the basis of inflated income.

FSA restricts short selling 18/9/08

Thu, 18 Sep 2008 00:00:00 GMT

The FSA amended the Code of Market Conduct to prohibit the active creation or increase of net short positions in publicly quoted financial companies and to require the disclosure on a daily basis of all net short positions in excess of 0.25 per cent of the ordinary share capital of the relevant companies held at market close on the previous working day. The provisions are to remain in force until 16 January 2009 subject to a review before 18 October 2008.

UK Insurance Limited 16/9/08

Tue, 16 Sep 2008 00:00:00 GMT

The FSA announced an undertaking from UK Insurance Limited not to use specified terms in its insurance policies which the FSA considered unfair under the Unfair Terms in Consumer Contracts Regulations 1999. The specific term was a general exclusion in respect of ‘consequential loss of any kind’ which the FSA considered to be unclear. The firm and its associated firms including those in the RBS Group, have agreed to redraft this exclusion as follows ‘We will not pay for any losses that are not directly associated with the incident that caused you to claim. For example, loss of earnings due to being unable to return to work following injury or illness happening whilst on a trip or the cost of replacing locks in the event that keys are lost whilst on a trip’.

FSA v Harrison 8/9/08

Mon, 08 Sep 2008 00:00:00 GMT

The FSA fined a former hedge fund manager at Moore Europe Capital Management £52,500 for using restricted information to buy bonds in a company in advance of the company’s announcement of a debt restructuring. The precise nature of the information communicated was not known because the relevant telephone calls were not communicated. Mr Harrison asserted that at the time it was provided he did not consider the information to be inside information, but subsequently accepted that it was. Mr Harrison’s penalty was reudced by 30% because of his agreement to settle at an early stage of the FSA’s investigation and his undertaking not to perform any controlled function or related activities for 12 months. This is believed to be the first such fine in the credit markets.

FSA v Robert James, Stuart Lawton and Paul Adams 2/09/08

Tue, 02 Sep 2008 00:00:00 GMT

The FSA banned three directors of London based insurance business, BPS Insure Limited for failing to inform the FSA that BPS had a deficit of approximately £3 million in its client account and had misused client money.

FSA v Approved Financial Solutions Ltd 28/08/08

Thu, 28 Aug 2008 00:00:00 GMT

The FSA fined this mortgage broker £63,000 after finindg the firm failed to ensure it gave suitable advice, and did not communicate accurate informations about mortgage charges to its customers.

FSA v Treadstone 13/08/08

Wed, 13 Aug 2008 00:00:00 GMT

The FSA obtained a permanent injunction preventing Treadstone Corp Ltd from illegally promoting and selling shares to UK investors in a scheme which involved the company issuing false share certificates and shares at a price more than their true worth.

FSA v Credit Suisse 12/08/08

Tue, 12 Aug 2008 00:00:00 GMT

The FSA fined the UK operations of Credit Suisse £5,600,000 for breaching FSA Principles 2 and 3 in respect of the business of its Structured Credti Group and not acting in a timely way in respect of concerns identified about the pricing of certain asset backed positions and inadequate controls in failing to recognise the wrong valuations.

Ravjani (t/a Astrad Finance) v Financial Services Authority [2008] UKFSM FSM063 (12 August 2008)

Tue, 12 Aug 2008 00:00:00 GMT

The failure by Mr Ravjani, a sole trader mortgage and general insurance intermediary to disclose when applying for authorisation that he had been declared bankrupt in 1995 justified the FSA’s decision on discovery to remove his authorisation with immediate effect. The authorisation and approval process does not leave any room for self assessment on the part of the Applicant in terms of the materiality or relevance of material in response to direct questions.

FSA v Omotayo Fawole 11/08/08

Mon, 11 Aug 2008 00:00:00 GMT

The FSA banned this mortgage broker and fined him £100,000. This is the eighteenth broker banned this year

FSA v Hastings 28/7/08

Mon, 28 Jul 2008 00:00:00 GMT

The FSA fined Hastings £735,000 for failing to treat its customers fairly after it cancelled multiple insurance policies which were incorrectly priced after an internal price quoting system went wrong. The FSA found that Hastings’ reliance on a cancellation clause which was not generally intended to be used in such circumstances was unfair.

FSA v Calvert 23/7/08

Wed, 23 Jul 2008 00:00:00 GMT

The FSA commenced its second criminal case over alleged insider dealing against a former trader at Cazenove, Malcolm Calvert in respect of trades made after he had left Cazenove in respect of HP Bulmer plc, Macdonald Hotels plc, Vernalis plc, Johnston Group plc and others.

FSA v Winterflood 17/7/08

Thu, 17 Jul 2008 00:00:00 GMT

The FSA has provisionally fined Winterflood £4 million over share dealing in an AIM-listed company. This is the biggest fine for market abuse on a regulated firm. Winterflood has referred the decision to the Financial Services and Markets Tribunal.

Heather, Moor & Edgecombe Limited v FSA 1/7/08

Tue, 01 Jul 2008 00:00:00 GMT

The Tribunal considered the criteria for granting permission to appeal to the Court of Appeal on a point of law under section 137 (1) of FSMA. Where the Tribunal had upheld the FSA’s conclusion that the firm’s Part IV permission should be cancelled where it had not paid a FOS Award despite having resisted its enforcement in civil proceedings. Such a decision was a determination of fact and was not amenable to appeal under section 137.

FSA v Merchant Securities Group Ltd 17/6/08

Tue, 17 Jun 2008 00:00:00 GMT

The FSA fined MSG the sum of £77,000 for inadequate protection of customers’ details. This was the first time that a stockbroking firm has been fined for weak data security controls.

Shevlin v Financial Services Authority [2008] UKFSM FSM060 (12 June 2008)

Thu, 12 Jun 2008 00:00:00 GMT

The FSA dismissed the application after repeated failures to meet the Court timetable and an unless order.

FSA v UK Land Investment 5/6/08

Thu, 05 Jun 2008 00:00:00 GMT

The FSA announced its application to wind up the largest land-banking company in the UK on the basis that the business allegedly amounts to an illegal “collective investment scheme”

FSA v Thinc Group (date uncertain)

Sun, 01 Jun 2008 00:00:00 GMT

The FSA fined the mortgage broker Thinc Group £900,000 for poor record-keeping and failing to prove that the sub-prime loans it sold were suitable for the customers who took them out.

Fox Hayes v Financial Services Authority [2008] UKFSM FSM058 (23 April 2008)

Wed, 23 Apr 2008 00:00:00 GMT

The FSA is for the first time seeking leave to appeal to the Court of Appeal against a decision of the Financial Services and Markets Tribunal in respect of the approval of financial promotions for unauthorised overseas companies.

FSA V Mansion House Securities Ltd - FSA/PN/031/2008 2/4/08

Wed, 02 Apr 2008 00:00:00 GMT

The FSA reviewed 30 recommendations relating to higher risk shares, made by Mansion House between May 2006 and January 2007. The FSA found that Mansion House's advisers had given customers inaccurate information and failed to highlight the risks associated with the recommended shares. The FSA fined Manson House £122,500.

FSA v Blake Independent Financial Services Limited FSA/PN/025/2008 19 March 2008

Wed, 19 Mar 2008 00:00:00 GMT

The FSA imposed a financial penalty of £31,500 (being £45,000 with a 30% reduction for early settlement) for Blake Independent with respect to breaches of Principle 2 (due skill, care and diligence), Principle 4, (financial prudence) and Principle 11 (relations with regulators).

FSA v Ethnic Mutual Ltd FSA/PN/018/2008 14/3/08

Fri, 14 Mar 2008 00:00:00 GMT

The FSA has suspended the registration of Ethnic Mutual Limited for three months. Ethnic Mutual Ltd is an exempt charity registered with us as an Industrial and Provident Society. The FSA took this action as Ethnic Mutual was unable to satisfy the FSA that it was operating for the benefit of the community, which is a condition of its registration.

FSA v Raja Shahid Mahmood trading as Aroza Property Services 6/3/2008

Thu, 06 Mar 2008 00:00:00 GMT

Cancellations of Part IV Permission: The FSA cancelled the Part IV Permission for failing to satisfy the threshold conditions. The FSA was not satisfied that he was a fit and proper person to conduct the business soundly and prudently.

FSA v Mitchell & Company Limited 22/2/2008

Fri, 22 Feb 2008 00:00:00 GMT

The FSA cancelled the Part IV Permission of Mitchell & Company Limited as the company was not conducting its business soundly and prudently. The FSA concluded that the company did not comply with the proper standards and had failed to satisfy the Threshold Conditions in relation to the regulated activities.

FSA v D S Insurance Services Limited 22/2/2008

Fri, 22 Feb 2008 00:00:00 GMT

Financial Services Authority v Hardie 28/1/08

Mon, 28 Jan 2008 00:00:00 GMT

Complaints Handling: The FSA prohibited the managing director of a company which had mishandled complaints relating to mortgage endowment policies from exercising significant influence over any person in relation to any regulated activity carried on by any other authorised person or exempt person. In handling complaints, Mr Hardie was found to have failed to investigate the complaints, to have handled them unfairly in among other things referring the complainants to FOS rather than giving them proper consideration; and failures in management controls and to observe regulatory requirements.

Financial Services Authority v HFC Bank 16/1/08

Wed, 16 Jan 2008 00:00:00 GMT

Systems and Controls: The FSA fined HFC Bank £1,000,000 for selling payment protection insurance to more than 160,000 customers between January 2005 and December 2007 without checking the customers’ need for the insurance. HFC Bank had also failed to keep adequate records of its PPI sales and did not investigate cases of misselling. The fine represented a 30% discount for early settlement.

Financial Services Authority v Miah 14/1/08

Mon, 14 Jan 2008 00:00:00 GMT

Unauthorised Trading: For the first time the FSA fined and banned a stockbroker at Square Mile Securities for deliberately misleading clients and risking their money in unauthorised trades. The fine was for £21,000.

Financial Services Authority v Square Miles Securities Limited 10/1/08

Thu, 10 Jan 2008 00:00:00 GMT

The FSA fined Square Mile £250,000 for persistently using high pressure sales tactics and misleading information to sell customers shares they did not want or could not afford. The failings warranted a fine of £1.5 million. This was reduced because of Square Mile’s agreement to settle at an early stage (30% reduction) and Square Mile’s financial circumstances.

Financial Services Authority v PB Roberts Ltd 18/12/07

Tue, 18 Dec 2007 00:00:00 GMT

The FSA issued a public censure against the mortgage broker for poor record keeping and publishing unclear advertising material. The broker could not demonstrate why it had recommended certain mortgages or if customers had been offered the cheapest deal even though many of its customers were in the sub prime or self-certified market.

R (on the app. of Brinsons) v Financial Ombudsman Service Limited (Admin) 2/11/07

Fri, 02 Nov 2007 00:00:00 GMT

The Financial Ombudsman had jurisdiction to review a complaint against a former member of the PIA even where he had ceased to be a member of the PIA before the transition period. The PIA rules required the co-operation of retiring and former members with its own ombudsman and thus on the relevant date the chartered surveyor remained susceptible to investigation by an ombudsman.

Wills & Co Stockbrokers Ltd v Financial Services Authority 31/10/07 FSA/PN/110/2007

Wed, 31 Oct 2007 00:00:00 GMT

The FSA imposed a financial penalty of £70,000 (but gave a 30% reduction for early settlement which brought the figure down to £49,000) on Wills & Co for misconduct following the breach of principles 3 and 7 of the Principles for Business, in particular, for failing to ensure that its customers understood the risks involved with penny shares, and for being unclear, unfair and misleading when advising on the shares.

Fox Hayes v Financial Services Authority [2007] UKFSM FSM047 (05 October 2007)

Fri, 05 Oct 2007 00:00:00 GMT

Fox Hayes approved financial promotions for overseas companies. The promotions took the form of letters to private investors offering a free research report into a company in which the investor already held shares. The FSA considered that Fox Hayes had not taken reasonable steps to ensure that the financial promotions were clear, fair and not misleading and imposed a penalty of £150,000. Fox Hayes referred the matter to the Tribunal. Before the Tribunal the FSA also argued that Fox Hayes had not arranged for the confirmation exercises to be carried out by an individual with appropriate expertise and that it had not conducted its business with due skill, care and diligence. Although Fox Hayes knew that the whole purpose of the offer of free research reports was to obtain the consent of investors to be contacted by the overseas companies who would then try to sell OTC Bulletin Board shares to them it had taken reasonable steps to ensure that the financial promotions themselves were clear, fair and not misleading. There had been no reason to obtain references or evidence that the overseas companies had the ability to produce the research reports. The “no reason to doubt” rule required the firm to consider all the information in its possession when deciding whether the overseas person will deal with customers in an honest and reliable way. As the overseas companies had sought approval and had put in place an escrow account it was reasonable for Fox Hayes initially to consider that the overseas companies intended to deal in an honest and reliable way. Although the FSA’s press releases, seminar and visit were not sufficient to change this, when taken together with complaints from investors, press reports and the Spanish regulator, these should have given some cause for concern as to the overseas companies’ intentions. An investor is not for the purposes of the rules treated in a reliable way if he is subjected to undue pressure or sold shares in a company which is known to be in difficulty. Even where Fox Hayes could not have known of the investor complaints and there was an escrow account providing a “cooling off” facility it should still have had reason to doubt the intentions of the overseas companies. The use of a solicitor of 20 years standing with experience of financial promotions and who thoroughly researched the regulatory position and meticulously checked the documents meant that the enquiries were carried out by an individual with appropriate expertise. In addition on the facts Fox Hayes did conduct its business with due skill, care and diligence. The Tribunal reduced the fine from £150,000 to £70,000 subject to submissions in respect of secret commissions.

Hayburn Rock Associates Ltd – Undertaking 6/8/07

Mon, 06 Aug 2007 00:00:00 GMT

The firm gave an undertaking to re-word its description of its remuneration clause to clearer language in accordance with the Unfair Terms Regulations.

Hayburn Rock Associates Ltd - Undertaking 6/8/07

Mon, 06 Aug 2007 00:00:00 GMT

The firm gave an undertaking to re-word its description of its remuneration clause to clearer language in accordance with the Unfair Terms Regulations.

FSA v Lawrence Scoffield Mortgages Limited; Council Homebuyers Limited and Mortgage Network Solutions 1/8/07

Wed, 01 Aug 2007 00:00:00 GMT

The FSA imposed fines of £10,500 on Lawrence Scoffield and Council Homebuyers and gave Mortgage Network a public censure in respect of management failings. The first two had failed to ensure that systems were in place so that only suitable mortgages were recommended and customers treated fairly. Mortgage Network did not have a system for keeping proper records relating to customers’ needs and circumstances and adequate training records.

FSA v Lawrence Scoffield Mortgages Limited; Council Homebuyers Limited and Mortgage Network Solutions 30/07/07

Mon, 30 Jul 2007 00:00:00 GMT

Laury v Financial Services Authority [2002] UKFSM FSM046 (18 July 2007)

Wed, 18 Jul 2007 00:00:00 GMT

Mr Laury was not sufficiently identified in the FSA’s Final Notice in respect of his employer to permit him to refer the Notice pursuant to FSMA s. 393.

FSA v Earlybird Finance Ltd 2/7/07

Mon, 02 Jul 2007 00:00:00 GMT

The FSA cancelled the Firm’s permission having withdrawn the approval granted to the Firm’s managing director and sole mortgage adviser. The Firm had been used to submit a number of fraudulent mortgage applications to lenders.

FSA v Kilminster Financial Management Limited 11/6/07

Mon, 11 Jun 2007 00:00:00 GMT

The FSA fined the Independent Financial Advisers £42,000 for management and complaints handling failings. The FSA found that the Firm had not been treating its customers fairly because it had not been responding to complaints in good time.

FSA v Layton 15/5/07

Tue, 15 May 2007 00:00:00 GMT

The FSA issued a prohibition order against the Director of Powell Price & Company Limited for accepting insurance premiums without passing them over to insurers; using client money to cover the Firm’s running costs; and failing to manage the Firm’s client account.

FSA v Charterhouse Wealth Management Ltd 11/5/07

Fri, 11 May 2007 00:00:00 GMT

A fine of £122,500 was imposed for carrying out the regulated activity of Discretionary Portfolio Management without the necessary permission under FSMA; for inadequate record keeping of client details to substantiate that proper investment advice had been given; for insufficient consideration of clients’ risk profiles prior to investment decisions; and inadequate communications with clients. The fine reflect maximum discount under the FSA’s executive settlement process of 30%.

FSA v BNP Paribas Private Bank SA London Branch 10/5/07

Thu, 10 May 2007 00:00:00 GMT

For the first time the FSA fined a private bank for deficient anti-fraud controls. In 2002 the FSA warned the bank about its risk management procedures. The bank’s own internal reviews had also identified a problem. However the risk management systems were not changed permitting a senior employee to defraud the bank of £1.4 million.

Haworth v FSA FIN/2006/0014

Fri, 20 Apr 2007 00:00:00 GMT

A complaint arising out of pensions advice was made to the FOS. The FOS directed Mr Haworth to carry out a loss assessment and to pay compensation of £300. Mr Howarth indicated to the FOS that he thought he would be unlikely, if ever, to make the payment required. In the meantime Mr Howarth sought authorisation in respect of general insurance business. This was granted on 14th January 2005. As Mr Howarth had ceased to trade the complainant’s file had been passed to the Financial Services Compensation Scheme who assessed the loss at more than £10,000. However as the FSCS was unable to determine that Mr Howarth would be unable to meet that claim it refused to award compensation from its funds to the complainant. The FSA determined that Mr Howarth had not met the Threshold Conditions in Schedule 6 including Principle 6 (Customers’ interests) and Threshold Condition 5 (Suitability).

FSA v Sesame Limited 19/4/07

Thu, 19 Apr 2007 00:00:00 GMT

The FSA fined Sesame Limited £330,000 for failing to handle complaints in respect of Structured Capital at Risk Products, for failing to train properly the individual complaints handlers or to monitor them and for rejecting approximately 350 customer complaints without insufficient evidence.

FSA v David Whistance 10/4/07

Tue, 10 Apr 2007 00:00:00 GMT

The FSA issued its first penalty for accounting failures and fined David Whistance a former finance director at Willams de Broe £30,000 for failing to “exercise due skill, care and diligence in carrying out his role” and for failing to ensure the company’s procedures met with regulatory requirements.

FSA v Alan Garlick 28/3/07

Wed, 28 Mar 2007 00:00:00 GMT

The FSA made a prohibition order in respect of failures of due skill, care and diligence and lack of compliance with regulatory standards in respect of ensuring that underwriting was in place for various policies sold, holding client money contrary to a condition of the company’s Part IV permission

Financial Penalty – Roberto Casoni 20/3/07

Tue, 20 Mar 2007 00:00:00 GMT

Approved Person. The FSA decided to impose a financial penalty in the sum of ₤52,500 (reduced from ₤75,000 for an early settlement) on Mr Roberto Casoni for failing to comply with a statement of principle in relation to his duties as an approved person. Mr Casoni was a research analyst at Citigroup’s Global Equity Reserch. He was a director and headed up the European equity research team that specialised in Italian stocks.

Capital One Bank (Europe) plc - Final Notice 15/2/07

Thu, 15 Feb 2007 00:00:00 GMT

The FSA imposed a financial penalty in the sum of £250,000 for failing to have adequate systems and controls in place when selling Payment Protection Insurance (PPI). The main part of Capital One’s business is to provide credit cards, loans and saving account and it also provides PPI policies for its credit card customers. Several customers did not receive the PPI policy document and they had an opportunity to be compensated for any loss. The FSA offers a 30% discount on financial penalties when a firm settles the matter at an early stage. The financial penalty was reduced to £175,000 after receiving the discount for an early settlement of the matter.

Nationwide Building Society - Final Notice 14/2/07

Wed, 14 Feb 2007 00:00:00 GMT

The FSA imposed a financial penalty in the sum of £980,000 for failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems. In August 2006 a laptop, which contained the names, addresses and account numbers of customers, was stolen from the home of an employee. The loss of the laptop was reported to the police, the Information Commissioner and the FSA. Nationwide failed to consider the wider implications and risks to customer information from their systems being compromised and as a result it failed to put in place appropriate controls and monitoring mechanisms to mitigate these risks. Nationwide is the largest building society in the UK and it made profits of approximately £550 million in 2005/2006. The financial penalty of £980,000 had received the FSA’s 30% discount for an early settlement otherwise the figure would have been £1.4 million.

GE Capital Bank Ltd - Final Notice 30th January 2007

Tue, 30 Jan 2007 00:00:00 GMT

Systems and Controls and TCF. GE Capital’s main business is providing credit finance through store cards, credit cards and sales finance. The PPI is usually offered to the customers at the till when they are applying for a store card. If it is not purchased at the till, customers are later contacted by GE Capital’s telesales staff. In 2005 alone, over 850,000 policies which included PPI were sold on its behalf. The FSA imposed a financial penalty on GE Capital Bank Ltd in the sum of £610,000 for failing to have adequate systems and controls for selling such insurance and for failing to treat customers fairly.

George Robert Piggott v FSA FIN 2006/0008 - 2/1/07

Tue, 02 Jan 2007 00:00:00 GMT

Prohibition Order. The FSA found that Mr Piggott, an IFA, was not fit to perform any of the functions carried out by an authorised person and made a prohibition order against him. Mr Piggott contested the prohibition order. After hearing the evidence, the Tribunal found, amongst other things, that Mr Piggott knowingly relied on forged documents, recommended lying to an insurance company, repeatedly failed to implement accurately instructions from clients and threatened some clients with litigation and verbal abuse. The Tribunal unanimously said that there was only one conclusion realistically open to them - to find that Mr Piggott was not a fit and proper person to perform any function in relation to any regulated activity carried on by any authorised person. Consequently making the prohibition order was and remained the appropriate action for the FSA to take.

Final Notice: Mr Lepine 20/12/06

Wed, 20 Dec 2006 00:00:00 GMT

The FSA decided that Mr Lepine of First Class Mortgages Ltd was not a fit and proper person to carry out his controlled functions as he failed to meet the fitness and propriety test contained in the FSA Rules because Mr Lepine had been convicted of misconduct whilst he was employed at Nomura Bank International.

Final Notice: Redcats (Brands) Ltd 20/12/06

Wed, 20 Dec 2006 00:00:00 GMT

The FSA imposed a financial penalty in the sum of £270,000 on Redcats for, amongst other things, failing to take effective care of their compliance arrangements and for not implementing adequate risk management systems.

Public Censure - FSA/PN/137/2006 20/12/06

Wed, 20 Dec 2006 00:00:00 GMT

The FSA imposed a public censure on Eastern Western Motor Group as it had failed to organise and control its regulated business effectively. In particular, it did not keep an adequate record of the PPI sale on customers' files or provide customers with a statement of the total price for the PPI policy. In addition it did not sufficiently apportion compliance responsibilities among its senior management and did not ensure adequate training and monitoring of its sales staff.

Injunction - FSA/PN/131/2006 5/12/06

Tue, 05 Dec 2006 00:00:00 GMT

The FSA has obtained an interim injunction at the High Court against Mr Christian Orpin, Mr Michael Vickery and Orpery Limited, of which they are the directors. The FSA believes that they were unlawfully accepting deposits without authorisation from the FSA. The injunction will prevent Mr Orpin, Mr Vickery and Orpery Limited from accepting deposits and it also freezes their assets.

Final notice: Braemar Financial Planning Limited

Mon, 04 Sep 2006 00:00:00 GMT

Financial penalties. The FSA imposed a financial penalty on Braemar of £182,000 for failing to comply with the Conduct of Business rules.

Strathardle Asset Management Ltd

Tue, 30 May 2006 00:00:00 GMT

Part IV Permission. On 30 May 2006 Strathardle Asset Management Ltd was refused Part IV Permission as personal investment firm and general insurance intermediary because it failed to satisfy the threshold conditions of adequate resources and suitability. The FSA’s decision also considered that Mr Davys, who was an Officer of the company, was not a fit and proper person.

Manchanda v Financial Services Authority Case 34

Wed, 17 May 2006 00:00:00 GMT

Fit and Proper Person. The Tribunal held that contrary to the RDC’s view Mr Manchanda was a fit and proper person. There was nothing to suggest that Mr Manchanda was linked to the serial frauds perpetrated by his previous company.

Middleton Financial Ltd 11 May 2006

Thu, 11 May 2006 00:00:00 GMT

Final Notice was given to the Middleton Financial Ltd on 11th May 2006 in order to cancel the Part IV permission granted for failing to satisfy the FSA's threshold conditions to the proper standard.

Besso Ltd 26th April 2006

Wed, 26 Apr 2006 00:00:00 GMT

The FSA imposed a financial penalty on Besso in the sum of £20,000 for Besso's conduct in relation to a former employee (who had been convicted of fraud) and a subsidiary company of Besso, which acted as the appointed representative, to carry out controlled functions. The former employee was not at any time an approved person. The FSA stated that the requirement that only approved persons carry out controlled functions extends to firms that use appointed representatives to perform those controlled functions for them.

FSA v Total Fleet Management Limited 20/4/06

Thu, 20 Apr 2006 00:00:00 GMT

Permission under Part IV of FSMA 2000 cancelled for failing to conduct business in compliance with proper standards and for failing to comply with Principle 11 and in particular for failing to submit its Retail Mediation Activities Return for the period ended 31 July 2005.

FSA v Easylife (UK) Limited 18/04/06

Tue, 18 Apr 2006 00:00:00 GMT

Permission under Part IV of FSMA 2000 cancelled on the basis that FSA was not satisfied Easylife was a fit and proper person and for failing to comply with Principle 11 and in particular for failing to pay fees to the FSA.

WeSearch Mortgages Limited 18/04/06

Tue, 18 Apr 2006 00:00:00 GMT

Paul A. Tebbutt

Mon, 10 Apr 2006 00:00:00 GMT

The FSA imposed a financial penalty on an individual in the sum of £35,000 in respect of misconduct whilst being an approved person. Mr Tebbutt was the Chief Executive of Millfield Group plc, which operated a network of financial advisers. The action arose as a result of misleading information provided by Mr Tebbutt to the FSA during its consideration of an application for change of control. The change of control in this case was an intended merger between Millfield Group plc and Inter-Alliance Group plc. The FSA did, however, grant approval for the change of control.

Baldwin v Financial Services Authority [2006] UKFSM FSM026 (24 January 2006)

Tue, 24 Jan 2006 00:00:00 GMT

The FSA alleged that Mr Baldwin had through his investment vehicle engaged in market abuse as defined by s 118 of FSMA. It was said that he had been given information about the performance of a company's principal asset which was not generally available to the market. WRT purchased shares which subsequently rose by more than 100% on announcement of the information to the public thereafter. Fines of £25,000 and £24,000 were imposed respectively by the FSA. On reference to the Tribunal, Counsel for the Applicants submitted that there was no case to answer. The Tribunal provided guidance as to how it would approach such a submission. Where the ultimate decision required findings of fact the application would not be acceded to. The Tribunal went on to overturn the FSA's decision on the basis that the alleged telephone conversation in which the alleged information was said to have passed did not take place.

FSA v Gale Financial 15/12/05 - FSA Decision

Thu, 15 Dec 2005 00:00:00 GMT

The FSA refused the application by Gale Financial to vary Part IV permission to include the regulated activity of making arrangements with a view to regulated mortgage contracts, as they had not satisfied the threshold conditions in relation to being a ‘fit and proper person’.

FSA v Eurodis Electron plc - FSA Decision

Thu, 15 Dec 2005 00:00:00 GMT

The FSA decided that Eurodis had contravened the continuing obligations rule and were in breach of the Listing Rule 9.2 as they had failed to announce ‘without delay’ a material change in their financial condition.

Crawford v Financial Institutions Services Ltd (Jamaica) [2005] UKPC 40 (2 November 2005)

Wed, 02 Nov 2005 00:00:00 GMT

The Court was entitled to draw adverse inferences from a party's decision not to give or call evidence as to matter within the knowledge of the witness or his employees. The weight would vary in each case. Where the witness had been the directing mind of a group and his control of the group had been gravely criticised, a decision not to testify was a strong indication that the witness had no satisfactory answer to what had been alleged judged by different standards.

Barlow Clowes International Ltd & Anor v Eurotrust International Ltd & Ors (Isle of Man) [2005] UKPC 37 (10 October 2005)

Mon, 10 Oct 2005 00:00:00 GMT

The test for liability for dishonest assistance in Royal Brunei Airlines v Tan had not been altered by Twinsectra. It requires a dishonest state of mind on the part of the person who assists in a breach of trust. Such a state of mind may consist in knowledge that the transaction is one in which he cannot honestly participate or in suspicion combined with a conscious decision not to make inquiries which might result in knowledge. Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendant’s mental state would be characterised as dishonest it is irrelevant that the defendant judges by different standards.

Greenfields Financial Management Ltd v The Financial Services Authority [2005] UKFSM FSM024 (3 October 2005)

Mon, 03 Oct 2005 00:00:00 GMT

Although the Tribunal was enjoined to consider whether to publicise its decision arising out of an unchallenged reference from the Authority’s decision, it would generally be in the public interest to publish such a decision.

Sir Philip Watts v FSA FSMT 07/09/05

Wed, 07 Sep 2005 00:00:00 GMT

Third Party Rights: The tribunal considered the rights of a third party in a market abuse case under s. 393 of the Financial Services and Markets Act 2000 and the application of rule 13 of the Financial Services and Markets Tribunal Rules 2001.

F T Insurance Services v FSA FSMT 13/07/05

Wed, 13 Jul 2005 00:00:00 GMT

Procedure: Time would be extended for filing a reference notice where there would be no prejudice to the Authority but prejudice to the applicant. Where the applicant had been convicted of crimes of dishonesty the Suspension Notice should remain in effect pending the outcome of the reference.

Khungar & Anor v Financial Services Authority [2005] UKFSM FSM018 (14 June 2005)

Tue, 14 Jun 2005 00:00:00 GMT

Authorisation: The HSF2 Form questions relating to disclosure of spent convictions and bankruptcy were clear and unambiguous. It was not for the Applicant to decide what matters he should disclose to the Authority. Rather he must answer the questions accurately and leave the decision of relevance to the Authority. Matters arising a considerable time ago were relevant where there was a sufficiently close similarity between the nature of the applicant’s business activities relating to the bankruptcy and conviction and that for which authorisation was sought.

Legal & General Assurance Society Ltd v Financial Services Authority [2005] UKFSM FSM016 (31 May 2005)

Tue, 31 May 2005 00:00:00 GMT

Penalties and Costs: A private warning is an inappropriate sanction where the issues are in the public domain and there had been significant and several breaches of rules. Public censure whilst itself a significant penalty is not appropriate where the breaches are serious. A fine was the only appropriate penalty. Adverse publicity generated during the course of public tribunal proceedings should not be taken into account as a mitigating factor in considering the amount of damages to be awarded however if the proceedings were unnecessarily extended by the conduct of the Authority that was a factor that could be taken into account in assessing the penalty. In respect of costs, “unreasonable” under FSMA Sched. 13 para 13 should be given its ordinary meaning.

Rajah v Financial Services Authority [2005] UKFSM FSM014 (17 May 2005)

Tue, 17 May 2005 00:00:00 GMT

An applicant who conceals information from the FSA and does not when challenged offer a full and candid explanation and apology may well be deemed at risk of not complying with Principle 11.