FSA Enforcement Ian Mason Head of Department, Wholesale Group Enforcement Division June 2005 Enforcement in the FSA context • FSA is not Enforcement led • Small.
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Transcript FSA Enforcement Ian Mason Head of Department, Wholesale Group Enforcement Division June 2005 Enforcement in the FSA context • FSA is not Enforcement led • Small.
FSA Enforcement
Ian Mason
Head of Department, Wholesale Group
Enforcement Division
June 2005
Enforcement in the FSA context
• FSA is not Enforcement led
• Small proportion (12%) of total budget
• Selective risk-based approach
Risk-based enforcement: selection of cases
for investigation
• Risk means risk to FSA’s four statutory
objectives
–
–
–
–
Market confidence
Public understanding
Protection of consumers
Financial crime
• Risk based approach operates at two main
levels
– Strategic planning and resourcing
– Individual case resourcing
FSA Enforcement Division
• About 250 staff
• Forensic investigators, lawyers and support
staff
• Wholesale and Retail Groups
• Reports directly to CEO
• Currently about 150 cases open
FSA Enforcement – key priorities
• Senior management responsibility
• Market abuse and insider dealing
• Breaches of the Listing Rules
• Conflicts of interest
• Mis-selling, complaints handling
• Financial promotions, financial resources
• Perimeter cases
Investigatory Powers
• FSMA part IX, sections 165–177
• Powers to require information
• Appointment and powers of investigators –
s167 and 168
• Skilled persons
• Search warrants
The Enforcement Toolkit
FSA ADMIN POWERS
CIVIL JUSTICE
CRIMINAL JUSTICE
•Discipline
•Injunctions
•Prosecute
•Vary firm’s permission
•Restitution
For What?
•Withdraw authorisation
or approval
•Insolvency Procs
Breach of Gen
Prohibition
•Prohibit individuals
Misleading statements
•Restitution
Misleading practices
•Sanctions for Market
Abuse
Insider Dealing
M L Regs
Enforcement: An Overview of the process
Urgent Action
FSA decide to use
enforcement tools
projects - planning, control
and organisation
urgent civil
action
investigations: gathering information and
documents
deciding to take
further action
handling specific issues
unauthorised
business
insolvency
proceedings and
orders against
debt avoidance
urgent
administrative
action
appointment
of a skilled
person
appointment
of third
parties
Regulatory Decisions
Committee
Financial Services and
Markets Tribunal
civil proceedings
international
enforcement
issues
collective
investment
schemes
criminal proceedings
publicity
RDC / Tribunal Process
• Warning Notice
• Written & Oral Representations
• Decision Notice
• Referral to Tribunal
• Final Notice
• Publicity
• Settlement / mediation available throughout
Sanctions
• Factors include
– Seriousness
– Deliberate or reckless behaviour
– Financial resources
– Conduct after contravention
– Disciplinary record and compliance history
2004 Outcomes
• 76 cases through RDC
• 38 references to Tribunal
• 4 Tribunal decisions
• 11 Tribunal cases struck out / withdrawn
• 101 Final Notices
• Over £21 million in fines
• Over 280 international requests
International Co-operation & Information
Sharing
• International co-operation between
regulators – crucial in the context of
regulating an increasingly global market
• Advance warning of problems through proactive sharing of intelligence
• Assistance with investigations involving
cross-border elements e.g. obtaining
documents and testimony
Number of requests
Number of international requests received by the FSA in 2004
50
45
40
35
30
25
20
15
10
5
43
Trend
31
29
28
23
22
25
24
18
18
22
16
-0
4
D
ec
N
ov
-0
4
4
ct
-0
O
-0
4
Se
p
4
A
ug
-0
4
Ju
l- 0
04
Ju
n-
4
M
ay
-0
4
A
pr
-0
ar
-0
4
M
04
Fe
b-
Ja
n0
4
-
US
9%
Others
27%
EU ONLY
64%
Requests for Assistance
Incoming Requests
• What do incoming overseas requests
relate to?
– Transaction data
– Good standing information
– Regulatory information from FSA’s files
– The exercise of statutory powers e.g. “sitting in”
– MLAT requests
Requests for Assistance
Breakdown by type of requests received during
June - December 2004
Others, 3%
Bank records, 1%
Goodstanding/
authorisation
enquiries, 23%
Interview (s), 3%
Transaction data,
48%
Regulatory
information, 17%
Proactive
disclosure, 6%
FSA’s power to co-operate – statutory
provisions
• Section 354: General duty to co-operate
– The FSA must take such steps as it considers appropriate to
co-operate with other persons … who have functions
• similar to those of the FSA; or
• in relation to the prevention and detection of crime
• Section 169: Assistance to overseas regulators
– Information gathering and document production (section 165)
– Appointing investigators (section 168(3))
– A direction permitting a representative of an overseas
regulator to attend and take part in interviews (section 169(7))
– Powers are backed by contempt sanctions (section 177)
Considerations in giving assistance
• Reciprocity of assistance
• Whether the assertion of jurisdiction has a close
parallel in the UK
• Seriousness of the case and its importance to
persons in the UK
• Whether in the public interest
• Contribution to cost
• Such considerations do not apply if we consider that
the exercise of investigative powers is necessary to
comply with a Community obligation
Disclosing Information to ORs
• Sections 348 and 349: a general prohibition on
disclosure of “confidential information” which
– relates to the business or other affairs of any person
– is received by the FSA in discharge of its functions
– is not available in the public domain
– is not summary information
• Treasury Regulations provide “gateways” enabling
disclosure
• Improper disclosure constitutes a criminal offence
Considerations in disclosing information
to non-EEA regulators
• Where “Directive information” is to be disclosed to
a non-EEA regulator there must be a “co-operation
agreement”
• Information must be subject to guarantees of
equivalent confidentiality protection
– Overseas regulator’s self-certification that equivalence can
be met
– FSA’s consideration of relevant factors including overseas
regulator’s self-certification, consideration of legislation in
relevant jurisdiction and our knowledge of the applicable
regime
• If it concerns personal data, considerations under
the Data Protection Act will also apply
Requests for assistance
What should requests contain?
• Description of underlying facts
• Connection with your jurisdiction & suspected breaches of
your legislation
• Responsibility for enforcing that legislation
• Information/assistance that you require
• Information useful in identifying relevant persons and
documents
• How that information/assistance will assist your enforcement
functions
• Intended use
• Time within which assistance required
• Preferred form in which information is required
• Related requests and other UK bodies contacted
• Special precautions (sensitivity/confidentiality)
• Contact information