Financial Services

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.

Argentina v NML Capital Ltd (CA) 4/2/10

Wed, 24 Feb 2010 22:55:04 GMT

A hedge fund sought to enforce in the English courts a judgment against Argentina in the US Courts in respect of Argentine sovereign debt. Permission to serve out of the jurisdiction had been obtained wrongly on the assertion that Argentina had submitted to the English jurisdiction. In those circumstances even though there may have been a basis for granting permission to serve out, the Court had no discretion to correct that error subsequently. The terms of the State Immunity Act precluded the court’s adjudicative role save in specific circumstances and where that jurisdiction had been exercised on a false basis and was no mere procedural error. A court cannot create a jurisdiction where there was none before. The effect of s. 31 (1) of the Civil Justice and Judgments Act was not to create a jurisdictional right that added a further exception to the State Immunity Act by implication. The reference in the underlying bonds to a waiver in respect of claim to which Argentina ‘< /SPAN>is or may be subject to a suit’ could not amount to a waiver where there was no jurisdiction for such suit. Even if there was a waiver of immunity that does not equate to a submission to jurisdiction.

In the matter of Lehman Brothers International (Ch) 20/1/10

Wed, 24 Feb 2010 22:52:25 GMT

The Court provided further answers to questions arising in light of its former judgment in respect of its earlier judgment of 15 December 2009. In terms of amounts segregated on a stock line basis in respect of Depot Breaks if the Administrators are able to ascertain precisely which clients were in fact adversely affected by the Depot Breaks then a client money entitlement would arise and would amount to an exception that the client money entitlement of each client will generally be apparent form the last internal client money reconciliation. A further exception relates to an intentional setting aside of a sum of money on trust for person from whom, upon subsequent inquiry, the bank had received credits shortly before the liquidation but had still not been segregated.

Shah & Anr v HSBC Private Bank (UK) Limited (CA) 4/2/10

Wed, 24 Feb 2010 22:50:25 GMT

The Court of Appeal considered multiple causes of action that had been brought against a bank by an account holder after it made a report to the authorities under the Proceeds of Crime Act 2002. Where a report was made the bank had a defence for not effecting the relevant transaction until permitted to do so if the suspicion was based on a possibility which was more than fanciful. It mattered not whether that suspicion was based on reasonable grounds, was irrational or arose from ‘negligently self-induced suspicion’. The matter was a question of fact that should be investigated at trial following disclosure. The concerns about ‘tipping off’ that prevent a relevant bank employee giving evidence at an interim stage were unlikely to arise at trial and even if they did sufficient protections could be put in place to allow the issue of fact to be determined. A banker’s duty of care to an account holder is not completely excluded by the 2002 Act. A delay in making a relev ant disclosure to the authorities might give rise to a breach of that duty. However it could not be seriously arguable that a bank could breach that duty by failing to seek advance consent in respect of future transactions because it is impossible to imagine the authorities giving consent in the abstract before any payment instruction is given. It was equally not seriously arguable that a bank should make a disclosure at the time monies are received in to the account where the customer is known and trusted because it is only on the payment instruction that the question of money laundering arises. At that stage no authority to carry out an as yet unknown payment instruction could be executed. There was on the facts of the case a potential factual issue relating to the bank’s duty as an agent to provide information about his principal’s affairs once the ‘tipping off’ period of time had passed that was along with the evidence of suspicion inappropriate for summary determination.

Titan Steel Wheels Ltd v Royal Bank of Scotland Plc (Comm) 21/2/10

Wed, 24 Feb 2010 22:43:34 GMT

The bank did not owe the client a tortuous duty of care in respect of the sale of derivative products where its contractual documents made clear that it was not acting in an advisory role.

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.

In the matter of Lehman Bros. Intl. (Europe) v CRC Credit Fund Ltd & Ors (15 December 2009)

Thu, 04 Feb 2010 15:46:23 GMT

The court determined a number of matters arising in respect of the Client Assets Sourcebook issued by the Financial Services Authority and the consequences of a primary pooling event on the entry in to administration of the bank. The bank had adopted the ‘alternative approach’ of client asset segregation whereby the monies were only segregated at the end of each business day. The bank had failed to segregate large sums of client money and there was therefore a significant shortfall in the client money pool. In determining what assets were recoverable by clients, the court held as follows: A statutory trust was imposed on the client money by CASS 7.7.2R at the moment of receipt. Between the time of receipt and the segregation of such sums the bank owed a duty to take reasonable steps to ensure that such sums were not put at risk and not used for the bank’s own purposes. Where sums had not been transferred to segregated accounts the client had to trace his property in the ordinary way and no assistance was provided by CASS. Once a primary pooling event such as the administration of the bank occurred, CASS did not provide for the pooling or distribution of sums outside the pool even where such sums were identifiable. The “client money entitlement” was the amount shown in the bank’s last internal client money reconciliation. Set-off had no part to play in relation to the distribution of money from the pool to clients.

In the matter of Lehman Bros. Intl. (Europe) v CRC Credit Fund Ltd & Ors (15 December 2009)

Thu, 04 Feb 2010 15:42:39 GMT

Cinnamon Europ. Struct. Credit Master Fund v Banco Comm. Portogues SA (18 December 2009)

Thu, 04 Feb 2010 15:41:00 GMT

The jurisdiction clause contained in a sales purchase agreement of loan notes provided for the Courts of England to have jurisdiction over claims in respect of and arising out of that agreement. The clause extended to disputes arising out of a service agreement in respect of those loan notes executed at the same time even though there was only a service of proceedings clause and no parallel jurisdiction clause.

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 Nomura (25 November 2009)

Tue, 29 Dec 2009 23:05:59 GMT

The FSA fined Nomura £1.75 million for failures in its systems and controls in the bank’s equity derivatives business. The failures related to the manner in which trades were entered into Nomura’s accounting systems which had allowed trades to be mismarked for five months. The fine represented a 30% discount in return for settling the investigation early and agreeing not to appeal the penalty.

Office of Fair Trading (OFT) v Abbey National plc & Ors [2009] UKSC 6 (25 November 2009)

Tue, 29 Dec 2009 23:05:03 GMT

Bank charges levied on accounts with unauthorised overdrafts were not subject to review by the OFT in respect of fairness because the scope of regulation 6 (2) (b) of the Unfair Contract Terms in Consumer Contracts Regulations 1999 (which limits the OFT’s assessment in respect of the adequacy of the price or remuneration, as against the goods or services supplied in exchange) included such bank charges. It was not, as the Court of Appeal had held, limited to “core terms” of the contract. The charges might still be open to assessment by the OFT on other grounds under Regulation 5.

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.

Independent Trustee Services Ltd v Hope & Ors (Ch) (10 November 2009)

Thu, 03 Dec 2009 17:09:21 GMT

The trustee of an underfunded pension fund sought directions from the Court in respect of its proposal to deploy a significant part of the fund’s assets to purchase annuities in substitution for the members’ entitlements under the scheme prior to the fund entering the Pension Protection Fund. That went beyond the purpose of the power in the scheme. Additionally it was wrong to take account in assessing the value of the scheme the potential compensation that might be paid out under the Pension Protection Fund.

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.

Rollins, R. v [2009] EWCA Crim 1941 (09 October 2009)

Mon, 02 Nov 2009 11:25:12 GMT

There was a joint appeal against the decisions that the FSA had the power to prosecute money laundering offences under the Proceeds of Crime Act 2002. The appeals were dismissed by the Court of Appeal. It was held that the FSA did have powers to prosecute beyond those given to the FSA under the Financial Services and Markets Act 2000 and, in particular, it had the power to prosecute the appellants for offences contrary to s.327 and s.328 of the Proceeds of Crime Act.

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.

Serious Organised Crime Agency v Pelekanos [2009] EWHC 2307 (QB) (02 October 2009)

Mon, 02 Nov 2009 11:20:29 GMT

A civil asset recovery order could be made under the Proceeds of Crime Act 2002 on the basis of a deliberately false statement in a mortgage application form where the statement had been intended and expected to be relied on.

Amro International SA & Anor, R (on the application of) v The Financial Services Authority & Ors [2009] EWHC 2242 (Admin) (25 August 2009)

Wed, 28 Oct 2009 11:42:25 GMT

The use by the FSA of its compulsory powers for document production to assist a foreign regulator such as the SEC in respect of a particular item of litigation was limited to categories of documents relating to the pleaded issues and did not extend to corroborative matters.

Senior-Milne, R (on the application of) v The Parliamentary and Health Service Ombudsman [2009] EWHC 2240 (Admin) (08 September 2009)

Wed, 28 Oct 2009 11:41:03 GMT

The FSA was under the jurisdiction of the Parliamentary Ombudsman in respect of prudential regulation and not conduct of business regulation. The Ombudsman had been correct to decline to investigate a complaint against the FSA in respect of its review of a circular distributed by Scottish Widows before demutualisation as it was a matter of conduct of business regulation.

SRM Global Master Fund LP & Ors v HM Treasury [2009] EWCA Civ 788 (28 July 2009)

Wed, 23 Sep 2009 14:58:34 GMT

The application for judicial review of the basis of assessment on which compensation would be payable to the former shareholders of Northern Rock following its nationalisation in February 2008 was rejected. The shareholders claimed that the statutory scheme under the Banking (Special Provisions) Act 2008 was a violation of their rights under Article 1 of the first protocol to the ECHR which guarantees the protection of private property. The Court of Appeal held that the margin of appreciation in this area was a wide one and that the purpose of the valuation process in the legislation was to value the company on the value it held without the Bank’s involvement as a lender of last resort. The argument that there were failures by the regulatory bodies in their supervision of Northern Rock should be factored in to the valuation process was rejected. As the Divisional Court had held the principal cause of any problems with Northern Rock lay with its management and that even if there had been a regulatory failure no duty was owed the Northern Rock shareholders and it could not avail those shareholders (including some of the Claimants) who had acquired their shares after the difficulties with Northern Rock became public. As the assumptions for valuation were capable of judicial review there was no procedural basis for declaring the legislation in contravention of Article 1.

Lancore Services Ltd v Barclays Bank Plc [2009] EWCA Civ 752 (23 July 2009)

Wed, 23 Sep 2009 14:56:55 GMT

Barclays was the relevant merchant acquirer in providing credit card facilities to Lancore. The rules relating to the operation of the Visa and MasterCard systems prohibit unless specially authorised a merchant processing sales on behalf of other businesses (aggregation). Barclays suspected Lancore was involved in aggregating payments and for businesses engaged in transactions relating to pharmaceutical products and pornography which were also not permitted. Barclays refused to transfer the sums processed on credit cards once it discovered this. The agreement with Barclays contained a contractual right for it to retain money if it suspected a breach. Lancore contended that it was not entitled to rely on this contractual right post termination of the contract. The Court rejected this and held that Barclays had a right of permanent retention.

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.

Hall v Cable and Wireless Plc [2009] EWHC 1793 (Comm) (21 July 2009)

Tue, 21 Jul 2009 13:59:00 GMT

Shareholders’ claims relying on breaches of sections of FSMA relating to alleged market abuse and listing rules breaches were struck out on the basis that FSMA provided no private cause of action in respect of sections 173A and 118. The allegations relating to misrepresentation by the Company under the Misrepresentation Act 1967 were also bound to fail as the shares were acquired not from the company, but in the market. The fact that the company subsequently registered the shareholders was neither here not there. The surviving cause of action in negligence was with one exception time barred because the shareholders’ loss had been suffered at the time of acquisition of the shares following Nykredit. One set of shareholders who sold their shares before the information became public was bound to fail on causation.

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.

European Commission launches review of Market Abuse Directive 29/04/09

Tue, 28 Apr 2009 23:00:00 GMT

The European Commission has launched a call for evidence on its review of the application of the Market Abuse Directive (MAD - 2003/6/EC). The Market Abuse Directive aims to ensure that behaviour such as insider dealing and market manipulation is properly deterred and sanctioned. The review is a key element of the European Commission's policy to strengthen the EU regulatory framework for financial services set out in the Communication on "Driving European recovery" and of its action plan to reduce administrative burdens on EU companies by 25% by the end of 2012. The period of consultation is from 20 April 2009 to 10 June 2009. Comments should be sent before 10 June 2009. http://ec.europa.eu/internal_market/consultations/2009/market_abuse_en.htm

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.

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.

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.

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.

Financial Services Authority v Hayes [2009] EWCA Civ 76 (17 February 2009)

Tue, 17 Feb 2009 00:00:00 GMT

The FSA succeeded in recovering a substantial sum against a firm of solicitors who had approved an offshore share broker’s promotion and operated an ‘escrow account’ for investor funds. The promotion on its face was innocuous in that it offered the relevant investor a free research report in to a listed UK company in which the investor already had shares. However by returning the investor would at the same time agree to be contacted by the overseas company. It was at this point that the broker would contact the investor and attempt to sell shares in offshore companies which were high risk and at best illiquid. The so-called ‘escrow account’ was in fact the firm’s client account. The firm would also arrange for the sending out of share certificates to investors and onward transfer offshore of the investor monies. The firm received a modest fee for its services. The relevant partner received a substantial commission of 4% of the purchase price. This was kept secret from the firm. The Financial Services and Markets Tribunal found that the firm knew that the whole purpose of the original offer of the free research reports was to obtain the consent of the investors to be contacted by the overseas companies with a view to trying to sell OTC Bulletin Board shares. The Court of Appeal held that as this purpose was not made clear in the promotional literature the promotion did not comply with Rule 3.8.4R.1 in that it was not clear, fair and not misleading. The true purpose had to be clear from the promotion. Equally the firm had every reason to doubt the honesty and reliability of the offshore share brokers by reason alone of the need to disguise the promotion and thus the firm was in breach of Rule 3.12.6R.2. The situation was compounded by the receipt of secret commission by the firm which underlined the likelihood of unreliable and dishonest dealing of the offshore brokers. The Tribunal had to consider the knowledge of the partnership as a whole including that of a partner involved in the scheme. The FSA was not to be criticised for not giving advice or guidance when asked for it by a company or firm it is investigating. It is the duty of the authorised person to comply with any relevant rule. In considering the relevant penalty to be paid by the firm it was appropriate to consider the financial resources of the relevant partners. Given the seriousness of the breach where investors have lost many millions of pounds and the firm was at least reckless in the breach a penalty of at least £750,000 would be appropriate. However because the test was a test case, the base penalty would be reduced to £500,000. The secret commissions fell to be considered as part of the partnership assets and thus the relevant penalty was to be increased by £454,770. The ultimate decision as to the level of penalty would depend on the means of the relevant partners.

Financial Services Authority v Bayshore Nominees Limited & Ors (ChD) 5/2/09

Thu, 05 Feb 2009 00:00:00 GMT

In its first full civil trial the FSA obtained declarations and injunctions in respect of the UK operations of a share investment scheme being promoted from Spain as well as the individuals and entities abroad. The UK operatives agreed to pay back more than £1,000,000 and compensation of more than £1,000,000 was also ordered to be repaid against the boiler room entities. The regulated activity of advising on investments took place in the United Kingdom where the advice was received by telephone by investors in the United Kingdom even though the telephone calls were made from abroad.

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.

Uberoi & Anor, R (on the application of) v City of Westminster Magistrates' Court & Ors [2008] EWHC 3191 (Admin) (02 December 2008)

Tue, 02 Dec 2008 00:00:00 GMT

The FSA was entitled to institute proceedings for an offence for insider dealing contrary to s. 52 of the Criminal Justice Act 1993 without obtaining consent of the relevant secretary of state or the DPP. The structure and content of FSMA 2000 amply demonstrated that it was Parliament’s intention that the Financial Services Authority could commence proceeding under Part V of the 1993 Act.

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

Financial Services Compensation Scheme Ltd v Abbey National Treasury Services Plc [2008] EWHC 1897 (Ch) (31 July 2008)

Thu, 31 Jul 2008 00:00:00 GMT

Compensation had been paid by the Financial Services Compensation Scheme to investors in respect of misselling claims where for the most part independent financial advisers would be unlikely to meet the claims. Claims against the company that collaborated in the development and promotion of such schemes were assigned. The FSA had the power under FSMA 2002 to include provision in the terms of the compensation scheme for the assignment to it of investors’ claims against third parties where it had compensated those investors. In calculating any damages no regard was to be given to the compensation received by the particular investors.

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.

Heather Moor & Edgecomb Ltd, R (on the application of) v Financial Ombudsman Service & Anor [2008] EWCA Civ 642 (11 June 2008)

Wed, 11 Jun 2008 00:00:00 GMT

The FOS’s requirement that financial advisers pay a case fee in respect of complaints made against it even if they were rejected was not unreasonable or unlawful. The Court of Appeal overturned the District Judge’s decision challenging the rules and regulations relating to the setting up of FOS.

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.

Financial Services Compensation Scheme Ltd. v Abbey National Treasury Services Plc [2007] EWHC 2868 (Ch) (04 December 2007)

Tue, 04 Dec 2007 00:00:00 GMT

Relying on legal advice privilege FSCS Ltd sought to redact several questions and answers on investors’ questionnaires which related to the legal advice provided by its legal department and disclosure of which it is said would have revealed the legal advice. The claim for privilege was upheld.

Northern Rock Plc v The Financial Times Ltd. & Anor [2007] EWHC 2677 (QB) (16 November 2007)

Fri, 16 Nov 2007 00:00:00 GMT

Before being provided with a copy of the Briefing Memorandum interested parties signed a letter confirming that they would keep confidential certain information within the Briefing Memorandum. After an article appeared in the Daily Telegraph containing reference to certain parts of the Briefing Memorandum, Northern Rock instructed PR Consultants to approach certain publishers to request restraint in respect of further publication. Neither the Financial Times nor the Daily Telegraph was aware of such representations. A few days later the FT’s website published ten pages of the Briefing Memorandum. During the course of that day other publications ran stories referring to the FT website. The bank was concerned that further publication of other parts of the Briefing Memorandum might cause it damage. The Court found that there was a public interest in preventing publication of the detailed information because it was confidential and could only have been received subject to a confidentiality agreement. There was no overriding risk that the public might be deceived by its non publication.

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.

Bunney v Burns Anderson Plc & Anor [2007] EWHC 1240 (Ch) (25 May 2007)

Fri, 25 May 2007 00:00:00 GMT

The Financial Ombudsman does not have the power to make a direction that would require a firm to make a payment that exceeds the statutory cap. If the cost of compliance with a direction is unknown at the time when the direction is made it is subject to an implicit limitation that it will not be enforceable beyond the statutory cap once reached. An order by the Ombudsman for a loss assessment and redress in accordance with regulatory guidance is not an order for the payment of money particularly where disputes over redress were to be referred back to the Ombudsman.

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.

Real Estate Opportunities Ltd v Aberdeen Asset Managers Jersey Ltd & Ors [2007] EWCA Civ 197 (09 March 2007)

Fri, 09 Mar 2007 00:00:00 GMT

Disclosure of FSA Interviews. The FSA’s investigations into the split capital investment trusts had included interviews with employees of the Defendants. In an action brought by one of those trusts against its former advisers, the Defendants sought to withhold from inspection transcripts of evidence given by employees of the Defendants to the FSA as part of their investigation and later provided to the Defendants and the FSA’s warning notices on the basis of ss. 348 and 391 of the Financial Services and Markets Act 2000. The Court of Appeal held that to rely on section 348 the Defendant needed to “obtain” information from the FSA. The Defendants could not “obtain” information where it knew or, knowledge of that information was to be attributed to it under the general law. The normal rules of attribution of knowledge applied. Inspection of the warning notices would not of itself result in publications within the meaning of s. 391.

In the matter of The Inertia Partnership LLP (Ch. D) 23/2/07

Fri, 23 Feb 2007 00:00:00 GMT

Winding up. The first contested petition for the winding up of a ‘body’ carrying on a regulated activity in contravention of the general prohibition under s. 367 of FSMA: The LLP carried on activities as a receiving agent for sums raised by off-shore companies promoting UK companies which were described as “boiler room” operations. In construing the scope of RAO articles 25 and 26 the Court held that “arrangements” is capable of having an extremely wide meaning embracing matters which do not give rise to legally enforceable rights and that for the purposes of article 25 a person may make “arrangements” even if his actions do not involve or facilitate the execution of each step necessary for entering into and completing the transaction; the exception in article 26 is a question of fact determining as a matter of causation whether the arrangements brought about the particular transaction. For the purposes of RAO article 25, the provision of post contract administrative services was a regulated activity. In determining whether to make an order on the just and equitable ground there is a close analogy between FSMA s. 367 and the court’s jurisdiction under s. 124A of the Insolvency Act 1986 and the jurisdiction should be exercised with a view to protecting the public interest, and in doing so the court needs to balance all relevant interests against each other in order to ascertain the just and equitable result.

Regency Investment Services Ltd - Final Notice 22/2/07

Thu, 22 Feb 2007 00:00:00 GMT

The FSA imposed a financial penalty of £20,000 on Regency Investment Services Ltd for failing to ensure that it had adequate procedures in place for monitoring or communicating effectively with its clients, but the fine was reduced to a sum of £14,000 for early settlement.

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.

Real Estate Opportunities Ltd v Aberdeen Asset Managers Jersey Ltd & Ors [2006] EWHC 3249 (Ch) (15 December 2006)

Fri, 15 Dec 2006 00:00:00 GMT

Disclosure. Transcripts of interviews conducted by the FSA and the Jersey Financial Services Commission with present and former employees of the defendant financial institutions were disclosable except and to the extent that they contained information which was not previously known to the defendants applying the ordinary rules of attribution

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.

Steria Ltd & Ors v Ronald Hutchison & Ors [2006] EWCA Civ 1551 (24 November 2006)

Fri, 24 Nov 2006 00:00:00 GMT

Standard Terms. Although explanatory material in respect of a pension scheme made it explicitly clear that pension entitlement could be taken at age 62 after 20 years contributions without any actuarial reduction, the same material expressly stated that the trust deed and rules governing the scheme prevailed. These provided that pre-65 receipt of the pension was subject to the employer's discretion. The Claimant's argument that the employer was estopped from providing such early benefits failed in the light of the reference to the rules prevailing.

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.

Broderick and Broderick v Centaur Tipping Services Limited (QBD) 27/07/06

Thu, 27 Jul 2006 00:00:00 GMT

The Defendants ran a “managed service” for laying of horses. The Claimants lost significant sums. They sought compensation under section 26 (2) (b) of the Financial Services and Markets Act 2000. Although the Defence admitted that the sums of money were deposited into a pooled account and that bets were laid by the Defendants on behalf of the subscribers and that the purpose was to enable those subscribers to participate in income from the laying of horses it denied that this amounted to a collective investment scheme under FSMA. The Court granted summary judgment on the basis that the admissions contained within the Defence meant that the Defendants had no real prospect of successfully maintaining their bare denials at trial and that on the evidence the Defendants did have day-to-day control within the meaning of section 235 (2) of FSMA.

R v Rigby & Bailey (CA) 12 July 2006

Wed, 12 Jul 2006 00:00:00 GMT

Confiscation Orders. The Defendants appealed against the courts decision for confiscation orders. On the ground of appeal concerning the shares, it was decided that a temporary, unrealised increase in the value of a shareholding would not amount to a benefit or pecuniary advantage to a defendant for the purpose of confiscation proceedings under the Criminal Justice Act 1988 Part VI, which provides for the confiscation of the proceeds of an offence. The Court of Appeal quashed the confiscation orders for the Defendants and reduced Mr Bailey’s compensation order from £141,686 to £35,114.

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.

Office of Fair Trading v Lloyds TSB Bank Plc & Ors [2006] EWCA Civ 268 (22 March 2006)

Wed, 22 Mar 2006 00:00:00 GMT

Credit card companies have “connected lender liability” under section 75 (1) of the Consumer Credit Act 1974 in respect of transactions entered into abroad.

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.

Financial Services Authority v Martin & Anor [2005] EWCA Civ 1422 (25 November 2005)

Fri, 25 Nov 2005 00:00:00 GMT

Sections 380 (2) and 382 Financial Services and Markets Act 2000 were not mutually exclusive. The preconditions for s. 380 (2) were that (1) a relevant contravention had to have taken place; and (2) there had to be steps intended to and reasonably capable of remedying that contravention. The solicitors knowingly concerned in the contravention could be sanctioned within s. 380 (2).

Financial Services Authority v Fradley & Woodward [2005] EWCA Civ 1183 (23 November 2005)

Wed, 23 Nov 2005 00:00:00 GMT

An unauthorised collective investment scheme would be investment business carried on in the UK, for the purposes of section 235 of the Financial Services and Markets Act 2000, if the activities in question which took place in the UK were a significant part of the business activity running the collective investment scheme.

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.

Moat Financial Services v Wilkinson [2005] EWCA Civ 1253 (11 October 2005)

Tue, 11 Oct 2005 00:00:00 GMT

Where personal guarantees had been provided in respect of an initial loan of £100,000 and a further advance was made of £150,000 and the guarantors of the initial loan signed a letter agreeing to that advance, then although not express in the letter, the personal guarantees extended to the full amount.

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.

British Aviation Insurance Company Ltd, Re [2005] EWHC 1621 (Ch) (21 July 2005)

Thu, 21 Jul 2005 00:00:00 GMT

Schemes of Arrangement: The Court’s jurisdiction and approach when creditors oppose a scheme of arrangement in respect of an insurer in run-off.

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.