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FCA Suffers Partial Reversal in Successful Appeal against Prohibition Order

The Upper Tribunal (Tax and Chancery Chamber) published its decision relating to Tariq Carrimjee on 6 March 2015.

Significantly the Tribunal referred back to the FCA the withdrawal of Mr Carrimjee’s approved person status having found that the regulator had not established that Mr Carrimjee had acted without integrity in breach of Principal 1 of the FCA's Statements of Principle and Code of Practice for Approved Persons (APER).

The Ruling relates back to a Decision Notice issued against Mr Carrimjee in August 2013, concerning his role at Somerset Asset Management LLP. In summary it had been alleged that Mr Carrimjee recklessly assisted a Dubai-based private investor, Rameshkumar Goenka, in his plan to manipulate the closing price of Gazprom global depository receipts (GDRs) in April 2010 and Reliance Industries Limited GDRs in October 2010.

Mr Carrimjee was fined £89,000, his approved person status was withdrawn and he was banned from performing any role in relation to any regulated financial services.  Mr Goenka was fined £6,108,707 in November 2011 for committing market abuse.

In reaching its decision the Tribunal found:

  • There was no cogent and compelling evidence that Mr Carrimjee knew or suspected that there was a risk that Mr Goenka was engaging in market abuse and turned a blind eye to it. Accordingly it could not be established that he failed to act with integrity in breach of Statement of Principle 1.
  • However Mr Carrimjee had not reacted appropriately to factors that were apparent to him, and he had therefore failed to act with due skill, care and diligence in breach of Statement of Principle 2.
  • The penalty assessed by the Regulatory Decisions Committee of £89,004 was appropriate and confirmed.

In light of the fact the FCA had not made out its case on integrity, the Tribunal remitted the matter to the FCA with a direction to reconsider its decisions to withdraw Mr Carrimjee's approvals and prohibit him from working in the regulated sector.

This is the first time that a decision has been partially referred back to the FCA and the decision may reinforce the views of those critics who would say that the FCA is too reliant on securing settlements and that its investigation are insufficiently robust when it is unable to find a party willing simply to take an early settlement discount. 

Certainly individuals and/or organisations ought to consider this case carefully and take expert advice if they are subject to an FCA investigation and in are any way concerned that the FCA is arriving at incorrect or incomplete conclusions.

For expert legal advice call our Business Crime and Regulatory Solicitors 24/7 on freephone 0800 916 9054 or contact us online and we will call you.

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