Fox Hayes v Financial Services Authority, Court of Appeal - United Kingdom Financial Services and Markets Tribunals, February 29, 2008, [2008] UKFSM FSM056

Resolution Date:February 29, 2008
Issuing Organization:United Kingdom Financial Services and Markets Tribunals
Actores:Fox Hayes v Financial Services Authority
 
FREE EXCERPT

PENALTY ­ penalty of £150,000 imposed by the Authority on the basis that the Applicant had received net profits from the business of £29,975 - in the First Decision in this reference the Tribunal indicated that, on the basis of its then findings, it would reduce the penalty to £70,000 ­ fresh evidence that the senior partner of the Applicant had also received commissions of $814,039 from the business ­ whether these commissions were profits of the Applicant ­ yes ­ whether the amount of the penalty should be increased from £70,000 ­ yes - penalty determined at £146,000. - FSMA 2000 s 206(1) THE FINANCIAL SERVICES AND MARKETS TRIBUNAL FOX HAYES Applicant - and - THE FINANCIAL SERVICES AUTHORITY Respondent Tribunal : DR A N BRICE (Chairman) MRS C E FARQUHARSON MISS S C O'NEILL Sitting in London on 4 February 2008 Charles Hollander QC, instructed by the Applicant, for the Applicant Timothy Dutton QC with Richard Coleman, Counsel, instructed by the Financial Services Authority, for the Authority ©CROWN COPYRIGHT 2008 2 FINAL DECISION Background1. Between February 2003 and June 2004 Fox Hayes (the Applicant) approved a number of financial promotions for unauthorized overseas companies. The Financial Services Authority (the Authority) was of the view that the Applicant had not taken reasonable steps to ensure that the financial promotions were clear, fair and not misleading and was also of the view that the Applicant had reason to doubt that the overseas companies would deal with customers in the United Kingdom in an honest and reliable way. The Authority therefore decided to impose a penalty on the Applicant of £150,000 and gave a decision notice to that effect on 29 September 2006. The Applicant referred that decision notice to the Tribunal.2. Before the Tribunal the Authority also argued that the Applicant had not arranged for the confirmation exercises (that the financial promotions complied with the rules) to be carried out by an individual with appropriate expertise and that the Applicant had not conducted its business with due skill, care and diligence. The Applicant disputed all the arguments of the Authority and was also of the view that the amount of the penalty was excessive.3. Our First Decision was released on 5 October 2007. At paragraph 176 we decided: (1) that the Applicant did take reasonable steps to ensure that the promotions were clear, fair and not misleading; (2) that the Applicant initially did not have reason to doubt that the overseas companies would deal with customers in the United Kingdom in an honest and reliable way; however by mid-November 2003 the Applicant did have reason to doubt and, in our view, should then have ceased to act until the doubts had been removed; (3) that the Applicant did arrange for the confirmation exercises (that the promotions complied with the rules) to be carried out by an individual with appropriate expertise; and (4) that the Applicant did conduct its business with due skill, care and diligence.4. Paragraph 61 of our First Decision set out the dates of twenty promotions approved by the Applicant of which ten were approved before November 2003 and ten after.5. In our First Decision we also considered the amount of the penalty and whether it was excessive. We bore in mind that the Applicant did not receive the advice and help that could have been given by the Authority. We also bore in mind that, when the doubt arose, legal advice was taken by the Applicant, a meeting was arranged with the overseas companies to discuss concerns, a new code of compliance was proposed, and arrangements for the monitoring of the telephone calls made by the overseas companies 3 was also proposed. All these arrangements were appropriate and it was unfortunate that the meeting with the representatives of the overseas companies did not take place earlier than March 2004.6. In the light of those findings our First Decision recorded that, in principle, we would reduce the penalty imposed by the Authority. The amount...

To continue reading

REQUEST YOUR TRIAL