Upper Tribunal has last word on Carrimjee case

Posted on 20 October 2016

Upper Tribunal has last word on Carrimjee case

The long running saga of Tariq Carrimjee has now finally come to an end.  By a Decision dated 20 October 2016, the Upper Tribunal dismissed Carrimjee's most recent reference. This left the FCA clear to issue its Final Notice, imposing a penalty of some £89,000 (not the subject of the reference) and a prohibition in relation to performing the compliance oversight (CF10) and the money laundering reporting (CF11) functions.

In brief summary, the FCA had previously decided that Carrimjee was in breach of Principle 1 (integrity) concerning his role in a plan by his client to manipulate the closing price of certain GDRs (see Enforcement Watch 11 "6 August 2013: Sanctions for failure in relation to another person's intended market abuse"). This led to a Decision Notice that he be fined £89,004 and prohibited from performing any function. Carrimjee initially referred this Decision Notice to the Tribunal.

The Tribunal decided that there was no breach of Principle 1, but that there was instead a breach of Principle 2 (due skill, care and diligence) (see Enforcement Watch 16 "6 March 2015: Tribunal breaks new ground in Carrimjee case").  It directed that the FCA fine him £89,000 and, as it was obliged to do, remitted the matter back to the FCA to reconsider the prohibition issue in light of its finding.  There was then a further Decision Notice, this time prohibiting Carrimjee from performing the CF10 and CF11 roles only.  Carrimjee referred this to the Tribunal and this is the reference that is the subject of the Tribunal's October 2016 Decision.

In this further reference, Carrimjee sought to adduce additional evidence of further training, as a result of which he argued he was competent and should not be prohibited from the CF10 and CF11 roles.  In the event, the Tribunal concluded that the FCA's decision to prohibit Carrimjee from the CF10 and CF11 roles was one which it was reasonably open to the FCA to make, and it accordingly dismissed the reference.


There were some interesting arguments in front of the Tribunal:

  • First, there was the question of what new evidence the Tribunal was permitted to consider.  Under Section 133(4) of FSMA, the Tribunal may consider any evidence relating to the subject matter of the reference, whether or not it was available to the decision maker at the material time.  The FCA tried to seriously constrain what that meant in practice in this case, building an argument around it relating to where there was a particular issue of fact.  The Tribunal was having none of it.  The Tribunal pointed out that a person against whom a decision was made could refer "the matter" to the Tribunal.  In the context here, the matter was whether Carrimjee was fit and proper to perform the CF10 and CF11 roles due to a lack of competence and capability.  What the Tribunal could consider was prescribed in the pleadings in relation to that issue.  Nothing in FSMA indicated any restrictions on that.  Accordingly, the Tribunal could consider evidence as to the further training, even though that evidence had not been before the RDC.
  • Second, there was an issue as to the role of the Tribunal in relation to "non-disciplinary cases" such as this was. The relevant legislative changes came into effect in April 2013. Since then, in non-disciplinary cases, the Tribunal either dismisses the case or remits it back to the decision maker. Where it remits the matter, it does so "with a direction to reconsider and reach a decision in accordance with the findings of the Tribunal" (Section 133(6) of FSMA).  Section 133(6A) says that those findings are limited to, amongst other things, "issues of fact or law" and "the matters to be, or not to be, taken into account in making the decision".  The Tribunal reviewed the cases on its role in such a situation. Essentially, it decided that its role was to decide whether the decision made by the FCA to impose a prohibition order was one which was within the range of reasonable decisions open to it.

    Based on the facts found in the Decision Notice, it reasoned that a decision by the FCA to impose the limited prohibition order it had done clearly fell within the range of reasonable decisions open to the FCA. However, the Tribunal now had to address:
    • whether in the light also of any further findings of fact the Tribunal made on Carrimjee's steps to address the failings found in the Decision Notice, the FCA's decision remained one that fell within the range of reasonable decisions open to the FCA; or
    • whether instead, the Tribunal's further findings were such that the matter should be remitted to the FCA for further consideration.  
    In fact, the Tribunal found that the new evidence did not give it confidence that Carrimjee now possessed the fundamental skills necessary to undertake the CF10 and CF11 roles. Accordingly, it dismissed the reference.

Beyond this, the case was interesting factually.  Carrimjee had sought to portray his failings as a one-off incident.  The Tribunal disagreed; it saw them as more fundamental than that.  Further, its comments about what further training Carrimjee undertook and when, together with its impact and whether it was simply for tactical advantage in the proceedings, makes interesting reading for enforcement practitioners.