The Financial Conduct Authority v Bright Management Solution Limited & Ors
[2024] EWHC 1200 (Ch)
The Financial Conduct Authority v Samuel Anthony Exall & Anor
17 May 2023
[2023] EWHC 1130 (Ch)
High Court
The government's financial watchdog (FCA) won money back from two dodgy investment schemes. Because it was hard to figure out exactly how much each person lost, the judge decided on simple ways to share the money fairly, giving a bit to everyone in one case and only those with bigger losses in the other.
Key Facts
- •Two applications by the Financial Conduct Authority (FCA) for directions under section 382(3) of the Financial Services and Markets Act 2000 (FSMA) regarding distribution of recovered amounts from unauthorized investment activities.
- •Case 1 (Synergy): FCA recovered £27,397.34 from unauthorized landbanking scheme. 32 investors identified.
- •Case 2 (Maricar): FCA recovered £106,650.58 from unauthorized forex investment scheme. 1387 investors identified, losses ranging from £52,781 to 10p.
- •FCA lacked resources to individually assess investor losses.
- •Jurisdictional issue in Synergy as funds weren't directly from a Section 382(2) order but a consent order.
Legal Principles
Court should consider the purpose of the order (compensating those affected by contraventions).
FCA v Anderson [2014] EWHC 363 (Ch); FCA v Paradigm Consultancy SA [2019] EWHC 3648 (Ch)
Where there's a shortfall and facts aren't fully established, a rough-and-ready approach is acceptable.
FCA v Anderson [2014] EWHC 363 (Ch); FCA v Paradigm Consultancy SA [2019] EWHC 3648 (Ch)
Distribution method should be simple, fair, and consider expense.
FCA v Anderson [2014] EWHC 363 (Ch); FCA v Paradigm Consultancy SA [2019] EWHC 3648 (Ch)
FCA must take reasonable steps to identify qualifying persons and their losses; proposal must be reasonably fair.
FCA v Paradigm Consultancy SA [2019] EWHC 3648 (Ch)
Section 382(3) applies even if funds weren't directly from a section 382(2) order, but arise from a claim under section 382(1).
FCA v Paradigm Consultancy SA [2019] EWHC 3648 (Ch)
Outcomes
Service dispensed with for respondents due to good reasons (difficulty locating respondents).
Respondents had no interest in the applications and were not effective respondents.
Per capita distribution approved for Synergy case.
Small recovery amount, difficulties verifying losses, and incomplete records made a per capita distribution appropriate and sufficiently fair.
Pro rata distribution with a £500 loss threshold approved for Maricar case.
More comprehensive records allowed for a pro rata approach; £500 threshold proportionate considering resource constraints and range of losses.
Court has jurisdiction to make distribution orders in Synergy case despite funds coming from a consent order, not a section 382(2) order.
The consent order implied the sums would arise from a claim under section 382(1) for an order under section 382(2).