Philip Hinks and William Day have successfully obtained summary judgment for the FCA against 24 Hour Trading Academy Limited (‘24HTA’) and its sole director and shareholder Mr Maricar for conducting business in breach of the general prohibition and the restriction on financial promotions under Financial Services and Markets Act 2000 (‘FSMA’).
The Court ordered a final prohibitory injunction against 24HRTA and restitution order against Mr Maricar, as being knowingly concerned in the breaches of FSMA, to strip him of the profits made from the unauthorised business.
The Defendants’ business involved the transmission of trading signals to clients via WhatsApp and Telegram containing recommendations as to trades in CFDs, spread betting and options in relation to FX and commodity prices. Clients were ‘guaranteed’ returns if they followed those signals. The Defendants also offered reduced fees for the signals service to anyone who opened accounts with ‘partner’ brokers to execute the trades, with links and partner codes advertised of their website. The Defendants earned significant levels of commission from their clients opening and operating those accounts.
24HRTA and Mr Maricar had previously been the subject of an FCA investigation for operating in breach of FSMA. Philip and William were instructed to seek a freezing order and interim prohibitory injunction on short notice last May.
In granting summary judgment, the Court accepted the FCA’s case that the admitted facts and documentary evidence should be characterised objectively as advice on regulated investments and making arrangements with a view to participants dealing in regulated investments under articles 25 and 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (‘ROA’).
Perhaps the most significant takeaway from the judgment is the breadth of the regulated activity of making arrangements for deals in investments (i.e., article 25 of the RAO), as found by the Court. The FCA did not need to show that the Defendants’ referrals to brokers had in fact caused consumers to engage in investment activity; it sufficed to show that this had been the Defendants’ intention, assessed objectively.
The judgment ( EWHC 648 (Ch)) is available here.