To Investigate Or Not To Investigate? No Need, Says The FSA, We'll Ban Him Anyway

Executive Summary

Over recent months, the FSA has had a clear, albeit not specifically announced, agenda not only to hold individuals accountable for breaches of regulatory rules (and to impose significant fines on those individuals) but to ban them from future participation in the regulated financial services industry wherever the FSA believes it possible. Apparently, this is all part of the FSA's credible deterrence strategy, notwithstanding the life-changing effect regulatory bans will (usually) necessarily have on the individuals concerned.

Consistent with that agenda, the FSA has gone two steps further than before in its decision notice dated 28 March 2012 (but published on 16 May 2012) issued to Mr Anthony Verrier, a former senior executive at BGC Brokers LP.

In that case, the FSA decided to prohibit Mr Verrier from performing any function associated with any regulated activity as he was not a 'fit and proper person'. The decision was based on the FSA's concerns as to Mr Verrier's honesty, integrity and reputation, as well as the severity of risk it believes Mr Verrier poses to confidence in the financial system.

What is notable about that decision, however, is that:

the FSA based its decision solely on the decision of the High Court in a civil case in which Mr Verrier was involved, which was totally unrelated to any regulated activities that had previously been conducted by Mr Verrier. In fact, the FSA itself did not conduct any independent investigation into Mr Verrier; and at the time, Mr Verrier was not an approved person, nor was he even employed by a UK regulated firm. The High Court Case

The High Court case relied upon by the FSA was that of Tullett Prebon plc (and two others) v BGC Brokers LP (and 13 others, including Mr Verrier) [2010] EWHC 484 (QB). Tullett and BGC are rival companies in the business of inter-dealing broking. When Mr Verrier left Tullett to join BGC, he took a significant number of Tullett employees with him.

Tullett sued BGC and BGC's former employees, including Mr Verrier, alleging conspiracy, inducing breach of contract and misuse of confidential information.

The Judge found in favour of Tullett. In particular, the Judge found that Mr Verrier had participated in an unlawful means conspiracy, including the inducement of the broker defendants to breach their contracts of employment with Tullett by leaving early without lawful justification. In acting as he did, Mr Verrier had considered that the...