6 March 2015
Tariq Carrimjee was previously the subject of a Decision Notice (see Enforcement Watch 11 "6 August 2013: Sanctions for failure in relation to another person's intended market abuse"). He referred the matter to the Upper Tribunal.
The Upper Tribunal issued its judgement in March this year. In short, the Upper Tribunal upheld the penalty of some £89,000. It found that Carrimjee was not guilty of a lack of integrity, but instead of a lack of due skill, care and diligence in failing to escalate the risk that his client may have been intending to engage in market manipulation. The details are set out in the commentary above; they are not themselves significant for the purposes of this commentary. What is more significant for the purposes of this publication are the various points of principle dealt with by the Upper Tribunal in the case, and which are discussed below.
The Decision of the Upper Tribunal can be found here.
There are many aspects that make Carrimjee an interesting decision. The three we particularly draw attention to are:
- This was the first case in which the Tribunal has remitted a case back to the FCA under the new powers that exist. There are essentially two types of appeals to the Upper Tribunal (or "references", as they are known). The first are "disciplinary references". These include decisions to impose a penalty. In these, the Upper Tribunal can itself determine the appropriate sanction. Here, it set the penalty at £89,000. The second type are "non-disciplinary references"; these include for example a prohibition. In such cases, under the new legislation, the Upper Tribunal can either dismiss the case or remit it back to the FCA to reach a decision in accordance with the findings of the Upper Tribunal. In the Carrimjee case, it did not dismiss the non-disciplinary part of the reference, but instead remitted it back to the FCA. The real point of principle is how far the Upper Tribunal can go in suggesting the approach the FCA should take when the matter is remitted. Under the new legislation, the Upper Tribunal can make findings of law. In the case of Carrimjee, it decided that it was in principle perfectly open to it to decide for example that, in the light of findings of fact it had made, a prohibition order would as a matter of law be either disproportionate or an order that no reasonable authority, properly directing itself as to the law, could make. Accordingly, it could effectively in those circumstances dictate to the FCA how it should decide at least part of the case, even though it was remitting it back to the FCA. In the facts of the Carrimjee case, which it found was one of a one off failing of skill, care and diligence, it said that it would be irrational and disproportionate as a matter of law if the FCA withdrew customer facing functions and all significant influence functions, or imposed a full prohibition. It left open the question of prohibition in relation to Carrimjee's previous compliance oversight and money laundering roles. We shall have to see the extent to which the Upper Tribunal in future effectively mandates particular results for non-disciplinary references.
- The second point of interest relates to the extent to which the FCA could seek to put a matter differently to how it had been put in another person's Final Notice. In Carrimjee, there had been a Final Notice against a Mrs Parikh in relation to this matter. The FCA sought to characterise Mrs Parikh's behaviour differently to what was found in the Final Notice. The Final Notice was not a judicial decision and so the doctrine of res judicata did not apply. Nevertheless, the Upper Tribunal found that Mrs Parikh's Final Notice was binding on the FCA when it came to issuing other related Notices. This was the case regardless of whether the Final Notice had been the product of a contested hearing or of a quick settlement.
Finally, there was also a full discussion of the relevant standard of proof. This was because Carrimjee was looking to the Upper Tribunal to say that a criminal standard should apply to his case. Having reviewed the authorities, the Upper Tribunal put the matter as follows "…in the familiar phrase, the time has come to say once and for all that the civil standard of proof applies in relation to all disciplinary and non- disciplinary references made to this Tribunal pursuant to FSMA."
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