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FCA issues ‘not fit and proper’ prohibition order

Earlier this week the Financial Conduct Authority (FCA) served a Final Notice on a former senior executive of an inter-dealer broking firm, banning him from performing any function in relation to any regulated activity in the financial services industry.

The reason given in the notice is that the FCA considers that the broker, Anthony Verrier (a former senior executive at BGC), is not a fit and proper person due to concerns over his integrity. It is an interesting example of the way in which the regulator will interpret the ‘Fit and Proper Test for Approved Persons’, set out in the FCA Handbook.

The FCA based its decision on a couple of court rulings in connection with Mr Verrier, with the position being neatly summarised in one - the Court of Appeal ruling in Tullett Prebon plc & Ors v BGC Brokers LP & Ors - where the Court explained:

“Mr Verrier was found [by the High Court] to have participated in an unlawful means conspiracy, the unlawful means including the inducement of the broker defendants to breach their contracts of employment with Tullett by leaving early without lawful justification."

In addition, the High Court, which had considered the case earlier in Tullett Prebon plc (and two others) v BGC Brokers LP (and 13 others, including Verrier), "found that in [Verrier’s] evidence Mr Verrier stuck to the truth where he was able to, but departed from it with equanimity and adroitness where the truth was inconvenient."

On the basis of this, says the FCA Final Notice, “Having regard to the Authority’s regulatory objectives, including the severity of the risk that Mr Verrier poses to the integrity of the UK’s financial system, the Authority considers it necessary and proportionate to exercise its powers to make the prohibition order in the terms set out above.”

Mr Verrier had referred the matter to the Upper Tribunal (Tax and Chancery Chambers) in April 2012 but recently decided to withdraw his reference, says the FCA.

The FCA’s ability to issue a “not fit and proper” prohibition order will almost certainly be used more frequently in the future. It is one of the more potent weapons in the FCA’s armoury and can be used against board members in appropriate cases.

Contact Jonathan Fisher QC

For specialist advice on issues of corporate, regulatory or financial crime, contact Jonathan Fisher QC on +44 (0)20 7427 463 or click here to make an electronic enquiry.

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The views expressed in this article represent those of the author and not Bright Line Law.

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