This weekly update from Clyde & Co’s Financial Services Regulatory Team summarises new developments as reported by the FSA, the UKLA, the Upper Tribunal, the Financial Ombudsman Service and the London Stock Exchange over the past week, with links to the full documents where these are available.

We hope that you will find this update useful. If you have any queries about any of the information in this update or financial services regulatory matters generally, please contact one of the individuals listed in the ‘Contacts’ section of this publication.

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Consultation papers:

No new developments this week.

Discussion papers:

No new developments this week.

Policy statements:

No new developments this week.

Press releases:

27 February: Three arrested in FSA insider dealing investigation. The FSA, with the assistance of the Metropolitan Police Service, have executed six search warrants in the City of London and Greater London Area. Three men aged 33, 37 and 39 have been arrested and are currently in custody to be questioned in connection with an investigation into insider dealing and market abuse. The FSA is currently prosecuting six other individuals for insider dealing.

http://www.fsa.gov.uk/library/communication/pr/2013/018.shtml

Speeches:

No new developments this week.

Bulletins and newsletters:

No new developments this week.

Final notices:

1 March: Final Notice: George Leavey. The FSA has published a Final Notice prohibiting George Leavey from performing any function in relation to a regulated activity. The FSA concluded that during his period as managing partner of First Colonial Investments LLP (FCI), Mr Leavey’s conduct demonstrated a serious lack of integrity in that he recklessly: directed FCI’s business and carried out a significant influence without any FSA approval to hold a controlled function; breached the FSA’s rules relating to clients’ assets and failed to segregate client money; allowed FCI to sell shares to clients when he knew that there was a pattern of non-delivery of shares to FCI’s clients. Further, the FSA decided Mr Leavey demonstrated a serious lack of competence and capability in that he failed to identify and remedy unsuitable sales practices by FCI’s sales advisers. Accordingly, the FSA concluded that Mr Leavey had failed to meet the minimum regulatory standards in terms of integrity, competence and capability and was not a fit and proper person to perform any functions in relation to regulated activities.

http://www.fsa.gov.uk/static/pubs/final/george-leavey.pdf

Application refusals:

No new developments this week.

Approved person refusals:

No new developments this week.

Research publications:

No new developments this week.

Consumer research:

No new developments this week.

Other FSA publications:

27 February: Notification of the temporary prohibition of short selling. The FSA published a notification of its temporary prohibition of short selling of the following financial instruments on all UK trading venues where they are traded:

  • Banco Popolare shares (ISIN code: IT0004231566)

  • Mediolanum shares (ISIN code: IT0001279501)

  • Banca Carige shares (ISIN code: IT0003211601)

  • INTESA shares (ISIN code: IT0000072618)

The prohibition, which was effective for the duration of 27 February 2013, follows a decision by the Italian Competent Authority (CONSOB), which the FSA has decided to assist. The FSA made this decision because of the significant price falls in these instruments. The prohibition does not extend to those market makers who are legitimately undertaking market-making activities in these instruments and for which they have previously notified the FSA of their intention to use the market maker exemption in these instruments.

http://www.fsa.gov.uk/library/communication/

26 February: Notice of Undertaking: Investec Bank plc. The FSA has published a Notice of Undertaking for Investec Bank plc (Investec) setting out agreed contractual changes to the Investec FTSE 100 Enhanced Kick-Out Plan 21, following the FSA’s assessment that some of the terms in that contract may be unfair. The first term which had provided Investec with a broad discretion to cancel a customer’s contract following any breach has been amended so that Investec can cancel the contract following a customer’s breach of a material obligation which they have failed to remedy within a reasonable time, or where the customer has given inaccurate information. The second term was deemed to not clearly explain the process for cancellations outside the 14 day cooling-off period, which has now been clarified with information on cancellations and how the early redemption fee (payable for cancellation outside the cooling-off period) is calculated.

http://www.fsa.gov.uk/static/pubs/other/undertaking-investec-bank.pdf

26 February: Notice of Undertaking: Morgan Stanley & Co International plc. The FSA has published a Notice of Undertaking for Morgan Stanley & Co International plc (Morgan Stanley) setting out two agreed contractual changes to the terms in the investment plan named Morgan Stanley FTSE Gilt Backed Growth Plan 9, and other plans with similar terms. The changes follow the FSA’s assessment that two of the terms may be unfair. The first term gave Morgan Stanley a broad discretion to cancel a customer’s contract if the customer had breached the contract in any way, which has now been clarified to provide for cancellation following breach of a material obligation, which the customer has failed to remedy within 3 months. The second term was a variation term giving Morgan Stanley the discretion to make any changes to the contract, which has now been clarified with the inclusion of a 30 day notice period for any contractual changes.

http://www.fsa.gov.uk/static/pubs/other/undertaking-morgan-stanley.pdf

26 February: Latest update on transition to the PRA. The FSA has published a letter from Andrew Bailey, managing director of the Prudential Business Unit, which has been sent to firms that will have the PRA as their lead supervisor. The letter sets out detailed information on what firms must do to prepare for legal cutover on 1 April 2013; including details on policy changes, a link to the new PRA web page and contact details. It also provides information about the publication of the PRA handbook. The letter also includes a series of FAQs on transition to the PRA.

http://www.fsa.gov.uk/static/pubs/other/pra-transition-update.pdf

UKLA publications:

No new developments this week.

Upper Tribunal (Tax and Chancery Chamber) (formerly Financial Services and Markets Tribunal (FSMT)):

No new developments this week.

Financial Ombudsman Service (FOS):

No new developments this week.

London Stock Exchange (LSE):

No new developments this week.

Legislative updates

No new developments this week.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.