Regulation Enforcement Decisions: Now it’s Personal

In regulation prediction is a dangerous game, but one prediction that appears likely to come true is that we will see more individual regulatory enforcement decisions and fewer corporate cases.

RegulationEnforcementIn regulation prediction is a dangerous game, but one prediction that appears likely to come true is that we will see more individual enforcement decisions and fewer corporate cases. We are already starting to see an increasing number of individual enforcement decisions and we think this trend will continue.

Individuals are more inclined to fight enforcement decisions, use the RDC and the Tribunal and less inclined to settle early. Which increases both the effort and cost per decision for the Regulators.

I was prompted to write because the FCA’s Upper Tribunal has released its judgment in relation to Timothy Roberts (Catalyst CEO) and Andrew Wilkins (Director). The Tribunal decided to impose a fine of £450,000 and to prohibit Mr Roberts from performing any role in regulated financial services and to fine Mr Wilkins £50,000, reduced from the FCAs original fine of £100,000. Catalyst was the UK distributor of bonds issued by ARM Asset Backed Securities SA (“ARM”).

ARM, based in Luxembourg, issued bonds and used the proceeds to invest in traded life assurance. ARM needed a licence from the Luxembourg regulator but did not have one. In November 2009, ARM was requested to cease issuing bonds until it was granted a licence.

Mr Roberts allowed:

  • Catalyst to continue promoting bonds and collecting funds after November 2009 and did not ring fence funds so that they could be paid back if ARM was refused a licence
  • Misleading information about ARM’s licence in a letter to IFAs in December 2009.

The Tribunal found that Mr Roberts demonstrated a serious lack of integrity and reckless disregard for investors. Mr Roberts had acted without due care, skill and diligence in failing to disclose significant information relating to ARM’s regulatory position. The Tribunal agreed with the FCA to impose a prohibition order on Mr Roberts on the grounds that he is not fit and proper.

The Tribunal agreed that Mr Wilkins had acted without due care, skill and diligence. It rejected that Mr Wilkins had acted recklessly and without integrity. The FCA’s decision to prohibit him from holding significant influence has been referred for reconsideration.

The Tribunal also found that Mr Roberts and Mr Wilkins did take reasonable steps to keep Catalyst’s compliance officer informed of ARM’s licence position prior to 24 December 2009.

Read the full notice at: http://www.fca.org.uk/news/upper-tribunal-judgment-timothy-roberts-andrew-wilkins

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