We await the decision of the Upper tribunal of the Financial Services Authority (FSA) in the case of Anthony Verrier, a senior executive of BGC Brokers who was the subject of a prohibition order by FSA in May 2012 on the basis that he was not a fit and proper person due to concerns over his honesty, integrity and reputation.
This case has some surprising distinguishing features from other FSA enforcement actions and gives an interesting insight into the more interventionist stance being adopted by the FSA.
- In the first place, the prohibition notice was issued without any prior investigation having been conducted by the FSA itself.
- Secondly, the ground that Mr Verrier was not “a fit and proper person” was not based on any findings in any civil, criminal, regulatory or other proceeding or investigation commenced against Mr Verrier personally. Instead, the FSA’s decision is based on comments made by a High Court Judge as to the truthfulness of Mr Verrier’s evidence in a civil employment dispute between two companies in which Mr Verrier had been employed.
The Original Dispute: 2009
Tullett Prebon Plc and BGC Brokers are rival companies in the business of inter-dealer broking. Mr Verrier joined BGC from Tullett in January 2009 as Executive Managing Director and General Manager. By the end of February 2009, 13 other Tullett employees had notified Tullett that they intend to leave Tullett and join BGC.
In March 2009 Tullett served proceedings against BGC seeking an injunction to prevent BGC from inducing any employee of Tullett to breach their employment contracts and alleging that Mr Verrier had led a conspiracy to induce Tullett employees to breach their employment contracts. The case went through to trial and Mr Verrier gave evidence before High Court Judge Mr Justice Jack in October 2009.
Ramifications in 2012
It was the findings of Mr Justice Jack as to Mr Verrier’s evidence that formed the basis for the FSA’s 2012 Decision Notice. In particular they rely upon a comment made by the Judge to the following effect:
“I found that in his evidence Mr Verrier stuck to the truth where he was able to but departed from it with equanimity and adroitness where the truth was inconvenient.”
The High Court decision went against BGC, and their appeal to the Court of Appeal was similarly unsuccessful. In dismissing the appeal, the Court of Appeal added the following comment as to Mr Verrier on which the FSA also relied:
“Mr Verrier was found to have participated in an unlawful means conspiracy, the unlawful means include the inducement of the broker defendants to breach their contracts of employment with Tullett by leaving early without lawful justification.”
Mr. Verrier’s representations to the FSA included the fact that the High Court proceedings were not criminal, did not concern regulated activity and resulted in no detriment to consumers. Despite all this being so, the FSA rejected these representations and quoted its own “Fit and Proper Test for Approved Persons” (FIT) stating that the FSA would have regard to:
whether the person has been the subject of any adverse finding….in civil proceedings, particularly in connection with investment or other financial business, misconduct…or management of a body corporate.
FSA’s Expansive Rules
The Decision, whether upheld on appeal or not, demonstrates the FSA’s determination to interpret its rules expansively especially when it comes to managers’ personal probity and conduct. It also shows that the FSA is not afraid to rely on findings in other proceedings to base its enforcement actions. The implications of this for Approved Persons who are summoned as witnesses or otherwise required to give evidence in proceedings entirely unrelated to regulated activities should not go unnoticed.
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