Far-Reaching New Prosecution Powers For The FSA

This article was first published in The Lawyer, November 2009

The surge in the number of criminal prosecutions brought by the FSA has been well-publicised. The recent Court of Appeal judgments in R v Rollins and R v McInerney will embolden further the financial regulator as a prosecutor of financial crime. The court held that the FSA can act as both a public and private prosecutor in relation to the same case, asserting that it can now prosecute for offences beyond those specified in the statute that empowered it to bring prosecutions.

Neil Rollins and Michael McInerney were the subject of separate prosecutions brought by the FSA, the former for insider dealing and the latter for boiler room fraud. The distinguishing feature of these cases was the addition of charges of money laundering against both defendants.

Implications of money laundering judgement

The significance of this move is that money laundering offences derive from the Proceeds of Crime Act 2002, not the Financial Services and Markets Act. The Court of Appeal ruled that the FSA, acting as an "ordinary citizen", had a common law entitlement to conduct a private prosecution for money laundering, saying this made "practical good sense".

It is not difficult to appreciate why the court found that allowing the FSA to act simultaneously in both capacities was sensible. Otherwise an allegation of money laundering would have to be decided by a separate trial brought by a different prosecuting agency.

Will other statutory bodies follow suit?

However, pragmatic judgments can sometimes create bad law. Doubts persist as to the wisdom of allowing the FSA to prosecute as both a public body and a private citizen. The judgment may be taken by other authorities - such as the Health and Safety Executive or the Department of Work and Pensions - as giving them the power to prosecute beyond their immediate remits. This moves the law into an area apparently not envisaged by Parliament.

Is the FSA a private person?

Promulgating the legal fiction that the FSA is no more than a private person may also have worrying implications. Public prosecutors such as the CPS are accountable for their decision-making at various levels: there is a duty to publish and abide by a code of practice, the availability of judicial review to overturn a flawed prosecutorial decision and, in the case of recklessness or worse, the crime and tort of misfeasance in public office. It may be safe to...

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