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In October last year we reported on the Court of Appeal decision
in R v Rollins, which concerned a prosecution by the FSA
for insider dealing and money laundering (see our LawNow).
In that case, the Court of Appeal confirmed the FSA's power to
prosecute offences beyond those expressly set out in the Financial
Services & Markets Act 2000 (
"FSMA"), including money-laundering
offences under the Proceeds of Crime Act 2002
("POCA"). That decision was subsequently
appealed and on 28 July 2010, the Supreme Court unanimously
dismissed the appeal.
Issue
The appellant, Mr Rollins, argued that the FSA's
powers to prosecute criminal offences were limited to those
referred to in sections 401 and 402 FSMA (which did not include
offences under POCA). Accordingly, the question was whether the
effect of sections 401 and 402 FSMA was to confine the FSA's
prosecution powers to the offences listed within those
sections.
The Supreme Court's judgment
The Supreme Court noted that any person has the right generally to
bring a private prosecution, subject to any statutory restrictions.
This right extends to a corporate, so long as it is permitted to do
so by its corporate instruments, such as its memorandum and
articles of association. Therefore, as a corporate body, the FSA
enjoys the right to bring private prosecutions, subject to any
statutory restrictions and provided it was permitted to do so under
its memorandum and articles. The FSA's objects include carrying
out any functions conferred on it by statute. FSMA sets out the
FSA's functions and objectives, which includes acting in a way
that it considers most appropriate to meet its regulatory
objectives, including the reduction of financial crime. In this
regard, it has powers of prosecution.
POCA did not contain any statutory restrictions on who may bring a
prosecution for an offence it created. Therefore, absent sections
401 and 402 FSMA, the FSA would have power to prosecute money
laundering offences under POCA, like anyone else.
The Supreme Court considered those sections of FSMA and agreed with
the Court of Appeal that the purpose of section 401(2) was not to
limit the offences that FSA was permitted to prosecute, but to
limit the power to prosecute offences under FSMA to the FSA (and
those other persons listed).
The Court roundly rejected the appellant's argument that FSMA
exhaustively defined the offences that the FSA could prosecute. The
Court noted that as one of the FSA's functions was to reduce
financial crime, "Parliament would not have intended to
deprive the FSA of the power to prosecute for offences of financial
crime (of which sections 327 and 328 of POCA are
examples)". If the FSA was limited to prosecuting solely
the offences listed in section 402, this would be an
"inefficient and unsatisfactory way of prosecuting
crime"; there was no need to infer that Parliament
intended to limit the FSA's power in this way.
The fact that the Explanatory Notes to FSMA may have assumed that
sections 401 and 402 provided an exhaustive code was irrelevant.
The Explanatory Notes were drafted by the Treasury and could not be
relied on to determine Parliament's intention. Further, the
fact that FSMA does not confer on FSA powers of investigation
regarding offences under POCA does not assist in interpreting its
prosecution powers - "the right of private prosecution
does not depend on the enjoyment of corresponding powers of
investigation".
Comment
While this case confirms that the FSA has broad powers to prosecute
financial crime, this does not mean that the FSA will now assume a
role of general fraud prosecutor. It is only likely to prosecute
other offences where an express offence under FSMA is the primary
offence.
The Coalition Government has signalled its intention to dismantle
FSA and bring together all those authorities who investigate and
prosecute economic crime into a new Economic Crime Agency (the
"ECA"). It remains to be seen whether
and how the Government's proposals will be followed through,
but if they are, the issues considered in R v Rollins may
become mute.
For a link to the Supreme Court ruling in R v Rollins
[2010] UKSC 39, please click here.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 30/07/2010.
