(1) Any body corporate or unincorporated association may apply to the Secretary of State for an order declaring it to be a recognised clearing house for the purposes of this Act.
(2) Subsections (2) to (5) of section 9 above shall have effect in relation to an application under subsection (1) above as they have effect in relation to an application under subsection (1) of that section; and any application under subsection (1) above shall be accompanied by—
(a) a copy of the applicant’s rules;
(b) a copy of any guidance issued by the applicant which is intended to have continuing effect and is issued in writing or other legible form; and
(c) particulars of any recognised investment exchange with which the applicant proposes to make clearing arrangements and of any other person (whether or not such an exchange) for whom the applicant provides clearing services.
(3) The Secretary of State may, on an application duly made in accordance with subsection (1) above and after being furnished with all such information as he may require in connection with the application, make or refuse to make an order (“a recognition order") declaring the applicant to be a recognised clearing house for the purposes of this Act.
(4) Subject to Chapter XIV of this Part of this Act, the Secretary of State may make a recognition order if it appears to him from the information furnished by the clearing house making the application and having regard to any other information in his possession that the clearing house—
(a) has financial resources sufficient for the proper performance of its functions;
(b) has adequate arrangements and resources for the effective monitoring and enforcement of compliance with its rules or, as respects monitoring, arrangements providing for that function to be performed on behalf of the clearing house (and without affecting its responsibility) by another body or person who is able and willing to perform it;
(c) provides or is able to provide clearing services which would enable a recognised investment exchange to make arrangements with it that satisfy the requirements of Schedule 4 to this Act; and
(d) is able and willing to comply with duties corresponding to those imposed in the case of a recognised investment exchange by paragraph 5 of that Schedule.
(5) Where the Secretary of State refuses an application for a recognition order he shall give the applicant a written notice to that effect stating the reasons for the refusal.
(6) A recognition order shall state the date on which it takes effect.
(7) A recognition order may be revoked by a further order made by the Secretary of State if at any time it appears to him—
(a) that any requirement of subsection (4) above is not satisfied in the case of the clearing house; or
(b) that the clearing house has failed to comply with any obligation to which it is subject by virtue of this Act;
and subsections (2) to (9) of section 11 above shall have effect in relation to the revocation of a recognition order under this subsection as they have effect in relation to the revocation of such an order under subsection (1) of that section.
(8) Section 12 above shall have effect in relation to a recognised clearing house and the requirements and obligations referred to in subsection (7) above as it has effect in relation to the requirements and obligations there mentioned.
40 Overseas investment exchanges and clearing houses.
(1) Any application under section 37(1) or 39(1) above by a body or association whose head office is situated in a country outside the United Kingdom shall contain the address of a place in the United Kingdom for the service on that body or association of notices or other documents required or authorised to be served on it under this Act.
(2) In relation to any such body or association sections 37(4) and 39(4) above shall have effect with the substitution for the requirements there mentioned of the following requirements, that is to say—
(a) that the body or association is, in the country in which its head office is situated, subject to supervision which, together with the rules and practices of that body or association, is such that investors in the United Kingdom are afforded protection in relation to that body or association at least equivalent to that provided by the provisions of this Act in relation to investment exchanges and clearing houses in respect of which recognition orders are made otherwise than by virtue of this subsection; and
(b) that the body or association is able and willing to co-operate, by the sharing of information and otherwise, with the authorities, bodies and persons responsible in the United Kingdom for the supervision and regulation of investment business or other financial services; and
(c) that adequate arrangements exist for such co-operation between those responsible for the supervision of the body or association in the country mentioned in paragraph (a) above and the authorities, bodies and persons mentioned in paragraph (b) above.
(3) In determining whether to make a recognition order by virtue of subsection (2) above the Secretary of State may have regard to the extent to which persons in the United Kingdom and persons in the country mentioned in that subsection have access to the financial markets in each others’ countries.
(4) In relation to a body or association declared to be a recognised investment exchange or recognised clearing house by a recognition order made by virtue of subsection (2) above—
(a) the reference in section 36(2) above to the matters dealt with in Schedule 4 to this Act shall be construed as a reference to corresponding matters;
(b) sections 37(7) and (8) and 39(7) and (8) above shall have effect as if the requirements mentioned in section 37(7)(a) and in section 39(7)(a) were those of subsection (2)(a) and (b) above; and
(c) the grounds on which the order may be revoked under section 37(7) or 39(7) above shall include the ground that it appears to the Secretary of State that revocation is desirable in the interests of investors and potential investors in the United Kingdom.
(5) In this section “country” includes any territory or any part of a country or territory.
(6) A body or association declared to be a recognised investment exchange or recognised clearing house by a recognition order made by virtue of subsection (2) above is in this Act referred to as an “overseas investment exchange" or an “overseas clearing house".
(1) The Secretary of State may make regulations requiring a recognised investment exchange or recognised clearing house to give him forthwith notice of the occurrence of such events relating to the exchange or clearing house as are specified in the regulations and such information in respect of those events as is so specified.
(2) The Secretary of State may make regulations requiring a recognised investment exchange or recognised clearing house to furnish him at such times or in respect of such periods as are specified in the regulations with such information relating to the exchange or clearing house as is so specified.
(3) The notices and information required to be given or furnished under the foregoing provisions of this section shall be such as the Secretary of State may reasonably require for the exercise of his functions under this Act.
(4) Regulations under the foregoing provisions of this section may require information to be given in a specified form and to be verified in a specified manner.
(5) Where a recognised investment exchange—
(a) amends, revokes or adds to its rules or guidance; or
(b) makes, terminates or varies any clearing arrangements,
it shall within seven days give written notice to the Secretary of State of the amendment, revocation or addition or, as the case may be, of the matters mentioned in paragraph (b) above.
(6) Where a recognised clearing-house—
(a) amends, revokes or adds to its rules or guidance; or
(b) makes a change in the persons for whom it provides clearing services,
it shall within seven days give written notice to the Secretary of State of the amendment, revocation or addition or, as the case may be, of the change.
(7) Notice need not be given under subsection (5) or (6) above of the revocation of guidance other than such as is mentioned in section 37(2)(b) or 39(2)(b) above or of any amendment of or addition to guidance which does not result in or consist of such guidance as is there mentioned.
The Society of Lloyd’s and persons permitted by the Council of Lloyd’s to act as underwriting agents at Lloyd’s are exempted persons as respects investment business carried on in connection with or for the purpose of insurance business at Lloyd’s.
(1) A person for the time being included in a list maintained by the Financial Services Authority (“the Authority”) for the purposes of this section (“a listed institution”) is an exempted person in respect of, and of anything done for the purposes of, any transaction to which Part I or Part II of Schedule 5 to this Act applies and in respect of any arrangements made by him with a view to other persons entering into a transaction to which Part III of that Schedule applies.
(2) The conditions imposed by the Authority for admission to the list referred to in this section and the arrangements made by it for a person’s admission to and removal from the list shall require the approval of the Treasury; and this section shall cease to have effect if that approval is withdrawn but without prejudice to its again having effect if approval is given for fresh conditions or arrangements.
(2A) Without prejudice to the generality of the Authority’s power to impose conditions for admission to the list, the conditions for admission may include—
(a) a condition having the effect of requiring the payment of an application fee, and
(b) a condition having the effect of requiring the payment of periodic fees.
(2B) A condition of the kind referred to in subsection (2A)(a) or (b) above—
(a) may provide for the amount payable to be such as is specified in, or determined under, the condition, and
(b) may make different provision for different cases.
(3) The Authority shall publish the list as for the time being in force and provide a certified copy of it at the request of any person wishing to refer to it in legal proceedings.
(4) Such a certified copy shall be evidence or, in Scotland, sufficient evidence of the contents of the list; and a copy purporting to be certified by or on behalf of the Authority shall be deemed to have been duly certified unless the contrary is shown.
(5) Neither the Authority nor any person who is, or is acting as, an officer or servant of the Authority shall be liable in damages for anything done or omitted in the discharge or purported discharge of any of the Authority’s functions under this section, unless it is shown that the act or omission was in bad faith.
(1) An appointed representative is an exempted person as respects investment business carried on by him as such a representative.
(2) For the purposes of this Act an appointed representative is a person—
(a) who is employed by an authorised person (his “principal") under a contract for services which—
(i) requires or permits him to carry on investment business to which this section applies; and
(ii) complies with subsections (4) and (5) below; and
(b) for whose activities in carrying on the whole or part of that investment business his principal has accepted responsibility in writing;
and the investment business carried on by an appointed representative as such is the investment business for which his principal has accepted responsibility.
(3) This section applies to investment business carried on by an appointed representative which consists of—
(a) procuring or endeavouring to procure the persons with whom he deals to enter into investment agreements with his principal or (if not prohibited by his contract) with other persons;
(b) giving advice to the persons with whom he deals about entering into investment agreements with his principal or (if not prohibited by his contract) with other persons; or
(c) giving advice as to the sale of investments issued by his principal or as to the exercise of rights conferred by an investment whether or not issued as aforesaid.
(4) If the contract between an appointed representative and his principal does not prohibit the representative from procuring or endeavouring to procure persons to enter into investment agreements with persons other than his principal it must make provision for enabling the principal either to impose such a prohibition or to restrict the kinds of investment to which those agreements may relate or the other persons with whom they may be entered into.
(5) If the contract between an appointed representative and his principal does not prohibit the representative from giving advice about entering into investment agreements with persons other than his principal it must make provision for enabling the principal either to impose such a prohibition or to restrict the kinds of advice which the representative may give by reference to the kinds of investment in relation to which or the persons with whom the representative may advise that investment agreements should be made.
(6) The principal of an appointed representative shall be responsible, to the same extent as if he had expressly authorised it, for anything said or done or omitted by the representative in carrying on the investment business for which he has accepted responsibility.
(7) In determining whether an authorised person has complied with—
(a) any provision contained in or made under this Act; or
(b) any rules of a recognised self-regulating organisation or recognised professional body,
anything which a person who at the material time is or was an appointed representative of the authorised person has said, done or omitted as respects investment business for which the authorised person has accepted responsibility shall be treated as having been said, done or omitted by the authorised person.
(8) Nothing in subsection (7) above shall cause the knowledge or intentions of an appointed representative to be attributed to his principal for the purpose of determining whether the principal has committed a criminal offence unless in all the circumstances it is reasonable for them to be attributed to him.
(9) In this Act “investment agreement” means any agreement the making or performance of which by either party constitutes an activity which falls within any paragraph of Part II of Schedule 1 to this Act or would do so apart from Parts III and IV of that Schedule.
(1) Each of the following persons is an exempted person to the extent specified in relation to that person—
(a) the Public Trustee when acting in the exercise of his functions under section 9 of the Administration of Estates Act 1925;
(b) the Probate Judge of the High Court of Northern Ireland when acting in the exercise of his functions under section 3 of the Administration of Estates Act (Northern Ireland) 1955;
(c) the Accountant General of the Supreme Court when acting in the exercise of his functions under Part VI of the Administration of Justice Act 1982;
(d) the Accountant of Court when acting in the exercise of his functions in connection with the consignation or deposit of sums of money;
(e) the Public Trustee when acting in the exercise of his functions under the Public Trustee Act 1906;
(f) the Master of the Court of Protection when acting in the exercise of his functions under Part VII of the Mental Health Act 1983;
(g) the Official Solicitor to the Supreme Court when acting as judicial trustee under the Judicial Trustees Act 1896;
(h) a registrar of a county court when managing funds paid into court;
(i) a sheriff clerk when acting in the exercise of his functions in connection with the consignation or deposit of sums of money;
(j) a person acting in his capacity as manager of a fund established under section 22 or 22A of the Charities Act 1960 , section 24 or 25 of the Charities Act 1993, section 25 of the Charities Act (Northern Ireland) 1964, section 11 of the Trustee Investments Act 1961 or section 42 of the Administration of Justice Act 1982;
(k) the Central Board of Finance of the Church of England or a Diocesan Authority within the meaning of the Church Funds Investment Measure 1958 when acting in the exercise of its functions under that Measure;
(l) a person acting in his capacity as an official receiver within the meaning of section 399 of the Insolvency Act 1986 or in that capacity within the meaning of any corresponding provision in force in Northern Ireland.
(2) Where a bankruptcy order is made in respect of an authorised person or of a person whose authorisation is suspended under section 28 above or who is the subject of a direction under section 33(1)(b) above or a winding-up order is made in respect of a partnership which is such a person, the trustee in bankruptcy or liquidator acting in his capacity as such is an exempted person but—
(a) sections 48 to 71 below and, so far as relevant to any of those provisions, Chapter IX of this Part of this Act; and
(b) sections 104, 105 and 106 below,
shall apply to him to the same extent as they applied to the bankrupt or partnership and, if the bankrupt or partnership was subject to the rules of a recognised self-regulating organisation or recognised professional body, he shall himself also be subject to those rules.
(3) In the application of subsection (2) above to Scotland—
(a) for the reference to a bankruptcy order being made in respect of a person there shall be substituted a reference to the estate of that person being sequestrated;
(b) the reference to a winding-up order in respect of a partnership is a reference to such an order made under section 72 below;
(c) for the reference to the trustee in bankruptcy there shall be substituted a reference to the interim trustee or permanent trustee within the meaning of the Bankruptcy (Scotland) Act 1985; and
(d) for the references to the bankrupt there shall be substituted references to the debtor.
(4) In the application of subsection (2) above to Northern Ireland for the reference to a bankruptcy order there shall be substituted a reference to an order of adjudication of bankruptcy and the reference to a trustee in bankruptcy shall include a reference to an assignee in bankruptcy.
(1) The Secretary of State may by order provide—
(a) for exemptions additional to those specified in the foregoing provisions of this Chapter; or
(b) for removing or restricting any exemption conferred by section 42, 43 or 45 above;
and any such order may contain such transitional provisions as the Secretary of State thinks necessary or expedient.
(2) An order making such provision as is mentioned in paragraph (a) of subsection (1) above shall be subject to annulment in pursuance of a resolution of either House of Parliament; and no order making such provision as is mentioned in paragraph (b) of that subsection shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.
(1) Any person who—
(a) makes a statement, promise or forecast which he knows to be misleading, false or deceptive or dishonestly conceals any material facts; or
(b) recklessly makes (dishonestly or otherwise) a statement, promise or forecast which is misleading, false or deceptive,
is guilty of an offence if he makes the statement, promise or forecast or conceals the facts for the purpose of inducing, or is reckless as to whether it may induce, another person (whether or not the person to whom the statement, promise or forecast is made or from whom the facts are concealed) to enter or offer to enter into, or to refrain from entering or offering to enter into, an investment agreement or to exercise, or refrain from exercising, any rights conferred by an investment.
(2) Any person who does any act or engages in any course of conduct which creates a false or misleading impression as to the market in or the price or value of any investments is guilty of an offence if he does so for the purpose of creating that impression and of thereby inducing another person to acquire, dispose of, subscribe for or underwrite those investments or to refrain from doing so or to exercise, or refrain from exercising, any rights conferred by those investments.
(3) In proceedings brought against any person for an offence under subsection (2) above it shall be a defence for him to prove that he reasonably believed that his act or conduct would not create an impression that was false or misleading as to the matters mentioned in that subsection.
(4) Subsection (1) above does not apply unless—
(a) the statement, promise or forecast is made in or from, or the facts are concealed in or from, the United Kingdom;
(b) the person on whom the inducement is intended to or may have effect is in the United Kingdom; or
(c) the agreement is or would be entered into or the rights are or would be exercised in the United Kingdom.
(5) Subsection (2) above does not apply unless—
(a) the act is done or the course of conduct is engaged in in the United Kingdom; or
(b) the false or misleading impression is created there.
(6) A person guilty of an offence under this section shall be liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding seven years or to a fine or to both;
(b) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both.
(1) The Secretary of State may issue statements of principle with respect to the conduct and financial standing expected of persons authorised to carry on investment business.
(2) The conduct expected may include compliance with a code or standard issued by another person, as for the time being in force, and may allow for the exercise of discretion by any person pursuant to any such code or standard.
(3) Failure to comply with a statement of principle under this section is a ground for the taking of disciplinary action or the exercise of powers of intervention, but it does not of itself give rise to any right of action by investors or other persons affected or affect the validity of any transaction.
(4) The disciplinary action which may be taken by virtue of subsection (3) is—
(a) the withdrawal or suspension of authorisation under section 28 or the termination or suspension of authorisation under section 33,
(b) the giving of a disqualification direction under section 59,
(c) the making of a public statement under section 60, . . .
(d) the application by the Secretary of State for an injunction, interdict or other order under section 61(1);
. . .
(e) the giving of a direction under regulation 18 of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations 1996 (directions) or the making of an application for an order under regulation 20 of those Regulations (application to court to remove director or depositary);
or
(f) the giving of a direction under regulation 18 of the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations (Northern Ireland) 1997 (directions) or the making of an application for an order under regulation 20 of those Regulations (application to court to remove director or depositary);
and the reference in that subsection to powers of intervention is to the powers conferred by Chapter VI of this Part.
(5) Where a statement of principle relates to compliance with a code or standard issued by another person, the statement of principle may provide—
(a) that failure to comply with the code or standard shall be a ground for the taking of disciplinary action, or the exercise of powers of intervention, only in such cases and to such extent as may be specified; and
(b) that no such action shall be taken, or any such power exercised, except at the request of the person by whom the code or standard in question was issued.
(6) The Secretary of State shall exercise his powers in such manner as appears to him appropriate to secure compliance with statements of principle under this section.
47B Modification or waiver of statements of principle in particular cases.
(1) The relevant regulatory authority may on the application of any person—
(a) modify a statement of principle issued under section 47A so as to adapt it to his circumstances or to any particular kind of business carried on by him, or
(b) dispense him from compliance with any such statement of principle, generally or in relation to any particular kind of business carried on by him.
(2) The powers conferred by this section shall not be exercised unless it appears to the relevant regulatory authority—
(a) that compliance with the statement of principle in question would be unduly burdensome for the applicant having regard to the benefit which compliance would confer on investors, and
(b) that the exercise of those powers will not result in any undue risk to investors.
(3) The powers conferred by this section may be exercised unconditionally or subject to conditions; and section 47A(3) applies in the case of failure to comply with a condition as in the case of failure to comply with a statement of principle.
(4) The relevant regulatory authority for the purposes of this section is—
(a) in the case of a member of a recognised self-regulating organisation or professional body, in relation to investment business in the carrying on of which he is subject to the rules of the organisation or body, that organisation or body;
(b) in any other case, or in relation to other investment business, the Secretary of State.
(5) The references in paragraph 4(1) of Schedule 2 and paragraph 4(2) of Schedule 3 (requirements for recognition of self-regulating organisations and professional bodies) to monitoring and enforcement of compliance with statements of principle include monitoring and enforcement of compliance with conditions imposed by the organisation or body under this section.
(1) The Secretary of State may make rules regulating the conduct of investment business by authorised persons but those rules shall not apply to . . . persons certified by a recognised professional body in respect of investment business in the carrying on of which they are subject to the rules of the . . . body.
(2) Rules under this section may in particular make provision—
(a) prohibiting a person from carrying on, or holding himself out as carrying on—
(i) investment business of any kind specified in the rules; or
(ii) investment business of a kind or on a scale other than that notified by him to the Secretary of State in connection with an application for authorisation under Chapter III of this Part of this Act, in a notice under section 32 above or in accordance with any provision of the rules or regulations in that behalf;
(b) prohibiting a person from carrying on investment business in relation to persons other than those of a specified class or description;
(c) regulating the manner in which a person may hold himself out as carrying on investment business;
(d) regulating the manner in which a person makes a market in any investments;
(e) as to the form and content of advertisements in respect of investment business;
(f) requiring the principals of appointed representatives to impose restrictions on the investment business carried on by them;
(g) requiring the disclosure of the amount or value, or of arrangements for the payment or provision, of commissions or other inducements in connection with investment business and restricting the matters by reference to which or the manner in which their amount or value may be determined;
(h) enabling or requiring information obtained by an authorised person in the course of carrying on one part of his business to be withheld by him from persons with whom he deals in the course of carrying on another part and for that purpose enabling or requiring persons employed in one part of that business to withhold information from those employed in another part;
(i) as to the circumstances and manner in which and the time when or the period during which action may be taken for the purpose of stabilising the price of investments of any specified description;
(j) for arrangements for the settlement of disputes;
(k) requiring the keeping of accounts and other records, as to their form and content and for their inspection;
(l) requiring a person to whom the rules apply to make provision for the protection of investors in the event of the cessation of his investment business in consequence of his death, incapacity or otherwise.
(3) Subsection (2) above is without prejudice to the generality of subsection (1) above and accordingly rules under this section may make provision for matters other than those mentioned in subsection (2) or further provision as to any of the matters there mentioned except that they shall not impose limits on the amount or value of commissions or other inducements paid or provided in connection with investment business.
(4) Rules under this section may also regulate or prohibit the carrying on in connection with investment business of any other business or the carrying on of any other business which is held out as being for the purposes of investment.
(5) In paragraph (e) of subsection (2) above “advertisement” does not include any advertisement which is subject to section 154 below or which is required or permitted to be published by listing rules under Part IV of this Act and relates to securities which have been admitted to listing under that Part; . . ..
(6) Nothing done in conformity with rules made under paragraph (h) of subsection (2) above shall be regarded as a contravention of section 47 above.
(7) Section 47(2) above shall not be regarded as contravened by anything done for the purpose of stabilising the price of investments if it is done in conformity with rules made under this section and—
(a) (i) in respect of investments which fall within any of paragraphs 1 to 5 of Schedule 1 to this Act and are specified by the rules; and
(ii) during such period before or after the issue of those investments as is specified by the rules or
(b) (i) in respect of such investments as are mentioned in subparagraph (a)(i) above; and
(ii) during a period starting with the date of the first public announcement of an offer of those investments which states the price or the minimum price at which the investments are to be sold and ending on the 30th day after the closing date specified in the announcement for acceptances of such offer.
(7A) For the purposes of subparagraph (b)(ii) of subsection (7) above “an offer" means an offer for cash (other than in relation to the issue of the investments in question) where either—
(a) the investments have been admitted to dealing on a recognised investment exchange or any other exchange of repute outside the United Kingdom; or
(b) the offer is on the occasion of such admission or conditional on such admission;
and the total cost of the investments subject to the offer at the price stated in the first public announcement mentioned in subsection (7) above is at least £15,000,000 (or the equivalent in the currency or unit of account in which the price is stated on the date of the announcement).
(8) The Secretary of State may by order amend subsection (7) above—
(a) by restricting or extending the kinds of investment to which it applies;
(b) by restricting it so as to apply only in relation to the issue of investments in specified circumstances or by extending it, in respect of investments of any kind specified in the order, so as to apply to things done during a specified period before or after events other than the issue of those investments.
(9) No order shall be made under subsection (8) above unless a draft of it has been laid before and approved by a resolution of each House of Parliament.
(10) Rules under this section may contain such incidental and transitional provisions as the Secretary of State thinks necessary or expedient.
(11) Section 63A below (application of designated rules) has effect as regards the application of rules under this section to members of recognised self-regulating organisations in respect of investment business in the carrying on of which they are subject to the rules of the organisation.
(1) The Secretary of State may make rules requiring—
(a) a person authorised to carry on investment business by virtue of section 25 or 31 above, or
(b) a member of a recognised self-regulating organisation carrying on investment business in the carrying on of which he is subject to the rules of the organisation,
to have and maintain in respect of that business such financial resources as are required by the rules.
(2) Without prejudice to the generality of subsection (1) above, rules under this section may—
(a) impose requirements which are absolute or which are to vary from time to time by reference to such factors as are specified in or determined in accordance with the rules;
(b) impose requirements which take account of any business (whether or not investment business) carried on by the person concerned in conjunction with or in addition to the business mentioned in subsection (1) above;
(c) make provision as to the assets, liabilities and other matters to be taken into account in determining a person’s financial resources for the purposes of the rules and the extent to which and the manner in which they are to be taken into account for that purpose.
(3) Section 63A below (application of designated rules) has effect as regards the application of rules under this section to members of recognised self-regulating organisations in respect of investment business in the carrying on of which they are subject to the rules of the organisation.
50 Modification of conduct of business and financial resources rules for particular cases.
(1) The Secretary of State may, on the application of any person to whom any rules made under section 48 or 49 above apply, alter the requirements of the rules so as to adapt them to the circumstances of that person or to any particular kind of business carried on or to be carried on by him.
(2) The Secretary of State shall not exercise the powers conferred by subsection (1) above in any case unless it appears to him that—
(a) compliance with the requirements in question would be unduly burdensome for the applicant having regard to the benefit which compliance would confer on investors; and
(b) the exercise of those powers will not result in any undue risk to investors.
(3) The powers conferred by subsection (1) above may be exercised unconditionally or subject to conditions.
(4) The powers conferred by subsection (1) above shall not be exercised in a case where the powers conferred by section 63B below are exercisable (powers of recognised self-regulating organisation in relation to designated rules).
(1) The Secretary of State may make rules for enabling a person who has entered or offered to enter into an investment agreement with an authorised person to rescind the agreement or withdraw the offer within such period and in such manner as may be prescribed.
(2) Without prejudice to the generality of subsection (1) above, rules under this section may make provision—
(a) for requiring the service of notices with respect to the rights exercisable under the rules;
(b) for the restitution of property and the making or recovery of payments where those rights are exercised; and
(c) for such other incidental matters as the Secretary of State thinks necessary or expedient.
(1) The Secretary of State may make regulations requiring authorised persons to give him forthwith notice of the occurrence of such events as are specified in the regulations and such information in respect of those events as is so specified.
(2) The Secretary of State may make regulations requiring authorised persons to furnish him at such times or in respect of such periods as are specified in the regulations with such information as is so specified.
(3) Regulations under this section shall not apply to a member of a recognised self-regulating organisation or a person certified by a recognised professional body unless he carries on investment business in the carrying on of which he is not subject to the rules of that organisation or body.
(4) Without prejudice to the generality of subsections (1) and (2) above, regulations under this section may relate to—
(a) the nature of the investment business being carried on;
(b) the nature of any other business carried on with or for the purposes of the investment business;
(c) any proposal of an authorised person to alter the nature or extent of any business carried on by him;
(d) any person becoming or ceasing to be a person of the kind to whom regard could be had by the Secretary of State under subsection (3) of section 27 above in deciding an application for authorisation under that section;
(e) the financial position of an authorised person as respects his investment business or any other business carried on by him;
(f) any property managed, and any property or money held, by an authorised person on behalf of other persons.
(5) Regulations under this section may require information to be given in a specified form and to be verified in a specified manner.
(6) Any notice or information required to be given or furnished under this section shall be given in writing or in such other manner as the Secretary of State may approve.
(1) The Secretary of State may make rules concerning indemnity against any claim in respect of any description of civil liability incurred by an authorised person in connection with his investment business.
(2) Rules under this section shall not apply to a member of a recognised self-regulating organisation or a person certified by a recognised professional body in respect of investment business in the carrying on of which he is subject to the rules of the organisation or body unless that organisation or body has requested that rules under this section should apply to him; and any such request shall not be capable of being withdrawn after rules giving effect to it have been made but without prejudice to the power of the Secretary of State to revoke the rules if he thinks fit.
(3) For the purpose of providing indemnity the rules—
(a) may authorise the Secretary of State to establish and maintain a fund or funds;
(b) may authorise the Secretary of State to take out and maintain insurance with insurers authorised to carry on insurance business under the law of the United Kingdom or any other member State;
(c) may require any person to whom the rules apply to take out and maintain insurance with any such insurer.
(4) Without prejudice to the generality of the foregoing provisions, the rules may—
(a) specify the terms and conditions on which, and the extent to which, indemnity is to be available and any circumstances in which the right to it is to be excluded or modified;
(b) provide for the management, administration and protection of any fund maintained by virtue of subsection (3)(a) above and require persons to whom the rules apply to make payments to any such fund;
(c) require persons to whom the rules apply to make payments by way of premium on any insurance policy maintained by the Secretary of State by virtue of subsection (3)(b) above;
(d) prescribe the conditions which an insurance policy must satisfy for the purposes of subsection (3)(c) above;
(e) authorise the Secretary of State to determine the amount which the rules require to be paid to him or an insurer, subject to such limits or in accordance with such provisions as may be prescribed by the rules;
(f) specify circumstances in which, where sums are paid by the Secretary of State or an insurer in satisfaction of claims against a person subject to the rules, proceedings may be taken against that person by the Secretary of State or the insurer;
(g) specify circumstances in which persons are exempt from the rules;
(h) empower the Secretary of State to take such steps as he considers necessary or expedient to ascertain whether or not the rules are being complied with; and
(i) contain incidental or supplementary provisions.
(1) The Secretary of State may by rules establish a scheme for compensating investors in cases where persons who are or have been authorised persons are unable, or likely to be unable, to satisfy claims in respect of any description of civil liability incurred by them in connection with their investment businesses.
(2) Without prejudice to the generality of subsection (1) above, rules under this section may—
(a) provide for the administration of the scheme and, subject to the rules, the determination and regulation of any matter relating to its operation by a body appearing to the Secretary of State to be representative of, or of any class of, authorised persons;
(b) establish a fund out of which compensation is to be paid;
(c) provide for the levying of contributions from, or from any class of, authorised persons and otherwise for financing the scheme and for the payment of contributions and other money into the fund;
(d) specify the terms and conditions on which, and the extent to which, compensation is to be payable and any circumstances in which the right to compensation is to be excluded or modified;
(e) provide for treating compensation payable under the scheme in respect of a claim against any person as extinguishing or reducing the liability of that person in respect of the claim and for conferring on the body administering the scheme a right of recovery against that person, being, in the event of his insolvency, a right not exceeding such right, if any, as the claimant would have had in that event; and
(f) contain incidental and supplementary provisions.
(3) A scheme under this section shall not be made so as to apply to persons who are members of a recognised self-regulating organisation except after consultation with that organisation or, except at the request of a recognised professional body, to persons who are certified by it and subject to its rules in carrying on all the investment business carried on by them; and no scheme applying to such persons shall be made unless the Secretary of State is satisfied that the rules establishing it make sufficient provision—
(a) for the administration of the scheme by a body on which the interests of those persons are adequately represented; and
(b) for securing that the amounts which they are liable to contribute reflect, so far as practicable, the amount of the claims made or likely to be made in respect of those persons.
(4) Where a scheme applies to such persons as are mentioned in subsection (3) above the rules under this section may—
(a) constitute the recognised self-regulating organisation or recognised professional body in question as the body administering the scheme in relation to those persons;
(b) provide for the levying of contributions from that organisation or body instead of from those persons; and
(c) establish a separate fund for the contributions and compensation payable in respect of those persons, with or without provision for payments and repayments in specified circumstances between that and any other fund established by the scheme.
(5) A request by a recognised professional body under subsection (3) above shall not be capable of being withdrawn after rules giving effect to it have been made but without prejudice to the power of the Secretary of State to revoke the rules if he thinks fit.
(6) Rules may be made—
(a) for England and Wales, under sections 411 and 412 of the Insolvency Act 1986;
(b) for Scotland—
(i) under the said section 411; and
(ii) in relation to the application of this section where the persons who are or have been authorised persons are persons whose estates may be sequestrated under the Bankruptcy (Scotland) Act 1985, by the Secretary of State under this section; and
(c) for Northern Ireland, under Article 359 of the Insolvency (Northern Ireland) Order 1989 and section 65 of the Judicature (Northern Ireland) Act 1978,
for the purpose of integrating any procedure for which provision is made by virtue of subsection (2)(e) above into the general procedure on a winding-up, bankruptcy or sequestration.
(1) The Secretary of State may make regulations with respect to money (in this section referred to as “clients’ money”) which authorised persons, or authorised persons of any description, hold in such circumstances as are specified in the regulations.
(2) Without prejudice to the generality of subsection (1) above, regulations under this section may—
(a) provide that clients’ money held by an authorised person is held on trust;
(b) require clients’ money to be paid into an account the title of which contains the word “client" and which is with an institution of a kind specified in the regulations or, in the case of . . . a person certified by a recognised professional body, by the rules of that . . . body;
(c) make provision with respect to the opening and keeping of clients’ accounts, including provision as to the circumstances in which money other than clients’ money may be paid into such accounts and the circumstances in which and the persons to whom money held in such accounts may be paid out;
(d) require the keeping of accounts and records in respect of clients’ money;
(e) require any such accounts to be examined by an accountant having such qualifications as are specified in the regulations and require the accountant to report to the Secretary of State, or in the case of . . . a person certified by a recognised professional body, to that . . . body, whether in his opinion the provisions of the regulations have been complied with and on such other matters as may be specified in the regulations;
(f) authorise the retention, to such extent and in such cases as may be specified in regulations, of so much of clients’ money as represents interest.
(3) Where an authorised person is required to have an auditor; whether by virtue of any provision contained in or made under any enactment (including this Act) or of the rules of any such . . . body as is mentioned in paragraph (b) of subsection (2) above, the regulations may require the examination and report referred to in paragraph (e) of that subsection to be carried out and made by that auditor.
(4) An institution with which an account is kept in pursuance of regulations made under this section does not incur any liability as constructive trustee where money is wrongfully paid from the account unless the institution permits the payment with knowledge that it is wrongful or having deliberately failed to make enquiries in circumstances in which a reasonable and honest person would have done so.
(5) In the application of this section to Scotland for the reference to money being held on trust there shall be substituted a reference to its being held as agent for the person who is entitled to call for it to be paid over to him or to be paid on his direction or to have it otherwise credited to him.
(6) Section 63A below (application of designated regulations) has effect as regards the application of regulations under this section to members of recognised self-regulating organisations in respect of investment business in the carrying on of which they are subject to the rules of the organisation.
(1) Except so far as permitted by regulations made by the Secretary of State, no person shall in the course of or in consequence of an unsolicited call—
(a) made on a person in the United Kingdom; or
(b) made from the United Kingdom on a person elsewhere,
by way of business enter into an investment agreement with the person on whom the call is made or procure or endeavour to procure that person to enter into such an agreement.
(2) A person shall not be guilty of an offence by reason only of contravening subsection (1) above, but subject to subsection (4) below—
(a) any investment agreement which is entered into in the course of or in consequence of the unsolicited call shall not be enforceable against the person on whom the call was made; and
(b) that person shall be entitled to recover any money or other property paid or transferred by him under the agreement, together with compensation for any loss sustained by him as a result of having parted with it.
(3) The compensation recoverable under subsection (2) above shall be such as the parties may agree or as a court may, on the application of either party, determine.
(4) A court may allow an agreement to which subsection (2) above applies to be enforced or money and property paid or transferred under it to be retained if it is satisfied—
(a) that the person on whom the call was made was not influenced, or not influenced to any material extent, by anything said or done in the course of or in consequence of the call;
(b) without prejudice to paragraph (a) above, that the person on whom the call was made entered into the agreement—
(i) following discussions between the parties of such a nature and over such a period that his entering into the agreement can fairly be regarded as a consequence of those discussions rather than the call; and
(ii) was aware of the nature of the agreement and any risks involved in entering into it; or
(c) that the call was not made by—
(i) the person seeking to enforce the agreement or to retain the money or property or a person acting on his behalf or an appointed representative whose principal he was; or
(ii) a person who has received or is to receive, or in the case of an appointed representative whose principal has received or is to receive, any commission or other inducement in respect of the agreement from a person mentioned in sub-paragraph (i) above.
(5) Where a person elects not to perform an agreement which by virtue of this section is unenforceable against him or by virtue of this section recovers money paid or other property transferred by him under an agreement he shall repay any money and return any other property received by him under the agreement.
(6) Where any property transferred under an agreement to which this section applies has passed to a third party the references to that property in this section shall be construed as references to its value at the time of its transfer under the agreement.
(7) Section 63A below (application of designated regulations) has effect as regards the application of regulations under this section to members of recognised self-regulating organisations in respect of investment business in the carrying on of which they are subject to the rules of the organisation.
As it applies to such persons in respect of such business the reference in subsection (1) above to conduct permitted by regulations made by the Secretary of State shall be construed—
(a) where or to the extent that the regulations do not apply, as a reference to conduct permitted by the rules of the organisation; and
(b) where or to the extent that the regulations do apply but are expressed to have effect subject to the rules of the organisation, as a reference to conduct permitted by the regulations together with the rules of the organisation.
(7A) In the application of this section to anything done by a person certified by a recognised professional body in carrying on investment business in the carrying on of which he is subject to the rules of the body, the reference in subsection (1) above to conduct permitted by regulations made by the Secretary of State shall be construed as a reference to conduct permitted by the rules of the body.
(8) In this section “unsolicited call” means a personal visit or oral communication made without express invitation.
(1) Subject to section 58 below, no person other than an authorised person shall issue or cause to be issued an investment advertisement in the United Kingdom unless its contents have been approved by an authorised person.
(2) In this Act “an investment advertisement” means any advertisement inviting persons to enter or offer to enter into an investment agreement or to exercise any rights conferred by an investment to acquire, dispose of, underwrite or convert an investment or containing information calculated to lead directly or indirectly to persons doing so.
(3) Subject to subsection (4) below, any person who contravenes this section shall be guilty of an offence and liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both;
(b) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both.
(4) A person who in the ordinary course of a business other than investment business issues an advertisement to the order of another person shall not be guilty of an offence under this section if he proves that he believed on reasonable grounds that the person to whose order the advertisement was issued was an authorised person, that the contents of the advertisement were approved by an authorised person or that the advertisement was permitted by or under section 58 below.
(5) If in contravention of this section a person issues or causes to be issued an advertisement inviting persons to enter or offer to enter into an investment agreement or containing information calculated to lead directly or indirectly to persons doing so, then, subject to subsection (8) below—
(a) he shall not be entitled to enforce any agreement to which the advertisement related and which was entered into after the issue of the advertisement; and
(b) the other party shall be entitled to recover any money or other property paid or transferred by him under the agreement, together with compensation for any loss sustained by him as a result of having parted with it.
(6) If in contravention of this section a person issues or causes to be issued an advertisement inviting persons to exercise any rights conferred by an investment or containing information calculated to lead directly or indirectly to persons doing so, then, subject to subsection (8) below—
(a) he shall not be entitled to enforce any obligation to which a person is subject as a result of any exercise by him after the issue of the advertisement of any rights to which the advertisement related; and
(b) that person shall be entitled to recover any money or other property paid or transferred by him under any such obligation, together with compensation for any loss sustained by him as a result of having parted with it.
(7) The compensation recoverable under subsection (5) or (6) above shall be such as the parties may agree or as a court may, on the application of either party, determine.
(8) A court may allow any such agreement or obligation as is mentioned in subsection (5) or (6) above to be enforced or money or property paid or transferred under it to be retained if it is satisfied—
(a) that the person against whom enforcement is sought or who is seeking to recover the money or property was not influenced, or not influenced to any material extent, by the advertisement in making his decision to enter into the agreement or as to the exercise of the rights in question; or
(b) that the advertisement was not misleading as to the nature of the investment, the terms of the agreement or, as the case may be, the consequences of exercising the rights in question and fairly stated any risks involved in those matters.
(9) Where a person elects not to perform an agreement or an obligation which by virtue of subsection (5) or (6) above is unenforceable against him or by virtue of either of those subsections recovers money paid or other property transferred by him under an agreement or obligation he shall repay any money and return any other property received by him under the agreement or, as the case may be, as a result of exercising the rights in question.
(10) Where any property transferred under an agreement or obligation to which subsection (5) or (6) above applies has passed to a third party the references to that property in this section shall be construed as references to its value at the time of its transfer under the agreement or obligation.
(1) Section 57 above does not apply to—
(a) any advertisement issued or caused to be issued by, and relating only to investments issued by—
(i) the government of the United Kingdom, of Northern Ireland or of any country or territory outside the United Kingdom;
(ii) a local authority in the United Kingdom or elsewhere;
(iii) the Bank of England or the central bank of any country or territory outside the United Kingdom; or
(iv) any international organisation the members of which include the United Kingdom or another member State;
(b) any advertisement issued or caused to be issued by a person who is exempt under section 36, 38, 42, 43, 44 or 45 above, or by virtue of an order under section 46 above, if the advertisement relates to a matter in respect of which he is exempt.
(c) any advertisement which is issued or caused to be issued by a national of a member State other than the United Kingdom in the course of investment business lawfully carried on by him in such a State and which confirms with any rules made under section 48(2)(e) above;
(d) any advertisement which—
(i) is subject to section 154 below; or
(ii) consists of or any part of listing particulars, supplementary listing particulars , a prospectus approved in accordance with listing rules made under section 144(2) or 156A(1) below, a solamentary prospectus approved in accordance with listing rules made for the purposes of section 147(1) below as applied by section 154A or 156A(3) below or any other document required or permitted to be published by listing rules under Part IV of this Act . . ..
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Section 57 above does not apply to an advertisement issued in such circumstances as may be specified in an order made by the Secretary of State for the purpose of exempting from that section—
(a) advertisements appearing to him to have a private character, whether by reason of a connection between the person issuing them and those to whom they are issued or otherwise;
(b) advertisements appearing to him to deal with investment only incidentally;
(c) advertisements issued to persons appearing to him to be sufficiently expert to understand any risks involved; or
(d) such other classes of advertisement as he thinks fit.
(4) An order under subsection (3) above may require any person who by virtue of the order is authorised to issue an advertisement to comply with such requirements as are specified in the order.
(5) An order made by virtue of paragraph (a), (b) or (c) of subsection (3) above shall be subject to annulment in pursuance of a resolution of either House of Parliament; and no order shall be made by virtue of paragraph (d) of that subsection unless a draft of it has been laid before and approved by a resolution of each House of Parliament.
(6) Subsections (1)(c) above does not apply to any advertisement relating to an investment falling within paragraph 5 of Schedule 1 to this Act.
(1) If it appears to the Secretary of State that any individual is not a fit and proper person to be employed in connection with investment business or investment business of a particular kind he may direct that he shall not, without the written consent of the Secretary of State, be employed in connection with investment business or, as the case may be, investment business of that kind—
(a) by authorised persons or exempted persons; or
(b) by any specified person or persons, or by persons of any specified description, falling within paragraph (a) above.
(2) A direction under this section (“a disqualification direction") shall specify the date on which it is to take effect and a copy of it shall be served on the person to whom it relates.
(3) Any consent by the Secretary of State to the employment of a person who is the subject of a disqualification direction may relate to employment generally or to employment of a particular kind, may be given subject to conditions and restrictions and may be varied by him from time to time.
(4) Where the Secretary of State proposes—
(a) to give a disqualification direction in respect of any person; or
(b) to refuse an application for his consent under this section or for the variation of such consent,
he shall give that person or the applicant written notice of his intention to do so, stating the reasons for which he proposes to act and giving particulars of the right to require the case to be referred to the Tribunal under Chapter IX of this Part of this Act.
(5) Any person who accepts or continues in any employment in contravention of a disqualification direction shall be guilty of an offence and liable on summary conviction to a fine not exceeding the fifth level on the standard scale.
(6) It shall be the duty of an authorised person and an appointed representative to take reasonable care not to employ or continue to employ a person in contravention of a disqualification direction.
(7) The Secretary of State may revoke a disqualification direction.
(8) In this section references to employment include references to employment otherwise than under a contract of service.
(1) If it appears to the Secretary of State that a person who is or was an authorised person by virtue of section 22, 24, 25 or 31 above has contravened—
(a) any provision of rules or regulations made under this Chapter or of section 56 or 59 above; or
(b) any condition imposed under section 50 above,
he may publish a statement to that effect.
(2) Before publishing a statement under subsection (1) above the Secretary of State shall give the person concerned written notice of the proposed statement and of the reasons for which he proposes to act.
(3) Where the reasons stated in the notice relate specifically to matters which—
(a) refer to a person identified in the notice other than the person who is or was the authorised person; and
(b) are in the opinion of the Secretary of State prejudicial to that person in any office or employment,
the Secretary of State shall, unless he considers it impracticable to do so, serve a copy of the notice on that other person.
(4) A notice under this section shall give particulars of the right to have the case referred to the Tribunal under Chapter IX of this Part of this Act.
(5) Where a case is not required to be referred to the Tribunal by a person on whom a notice is served under this section the Secretary of State shall, at the expiration of the period within which such a requirement can be made, give that person written notice that the statement is or is not to be published; and if it is to be published the Secretary of State shall after publication send a copy of it to that person and to any person on whom a copy of the notice under subsection (2) above was served.
(1) If on the application of the Secretary of State the court is satisfied—
(a) that there is a reasonable likelihood that any person will contravene any provision of—
(i) rules or regulations made under this Chapter;
(ii) sections 47, 56, 57, or 59 above;
(iii) any requirements imposed by an order under section 58(3) above; or
(iv) the rules of a recognised self-regulating organisation, recognised professional body, recognised investment exchange or recognised clearing house to which that person is subject and which regulate the carrying on by him of investment business,
or any condition imposed under section 50 above;
(b) that any person has contravened any such provision or condition and that there is a reasonable likelihood that the contravention will continue or be repeated; or
(c) that any person has contravened any such provision or condition and that there are steps that could be taken for remedying the contravention,
the court may grant an injunction restraining the contravention or, in Scotland, an interdict prohibiting the contravention or, as the case may be, make an order requiring that person and any other person who appears to the court to have been knowingly concerned in the contravention to take such steps as the court may direct to remedy it.
(2) No application shall be made by the Secretary of State under subsection (1) above in respect of any such rules as are mentioned in subsection (1)(a)(iv) above unless it appears to him that the organisation, body, exchange or clearing house is unable or unwilling to take appropriate steps to restrain the contravention or to require the person concerned to take such steps as are mentioned in subsection (1) above.
(3) The court may, on the application of the Secretary of State, make an order under subsection (4) below or, in relation to Scotland, under subsection (5) below if satisfied—
(a) that profits have accrued to any person as a result of his contravention of any provision or condition mentioned in subsection (1)(a) above; or
(b) that one or more investors have suffered loss or been otherwise adversely affected as a result of that contravention.
(4) The court may under this subsection order the person concerned to pay into court, or appoint a receiver to recover from him, such sum as appears to the court to be just having regard—
(a) in a case within paragraph (a) of subsection (3) above, to the profits appearing to the court to have accrued;
(b) in a case within paragraph (b) of that subsection, to the extent of the loss or other adverse effect; or
(c) in a case within both paragraphs (a) and (b) of that subsection, to the profits and to the extent of the loss or other adverse effect.
(5) The court may under this subsection order the person concerned to pay to the applicant such sum as appears to the court to be just having regard to the considerations mentioned in paragraphs (a) to (c) of subsection (4) above.
(6) Any amount paid into court by or recovered from a person in pursuance of an order under subsection (4) or (5) above shall be paid out to such person or distributed among such persons as the court may direct, being a person or persons appearing to the court to have entered into transactions with that person as a result of which the profits mentioned in paragraph (a) of subsection (3) above have accrued to him or the loss or adverse effect mentioned in paragraph (b) of that subsection has been suffered.
(7) On an application under subsection (3) above the court may require the person concerned to furnish it with such accounts or other information as it may require for establishing whether any and, if so, what profits have accrued to him as mentioned in paragraph (a) of that subsection and for determining how any amounts are to be paid or distributed under subsection (6) above; and the court may require any such accounts or other information to be verified in such manner as it may direct.
(8) The jurisdiction conferred by this section shall be exercisable by the High Court and the Court of Session.
(9) Nothing in this section affects the right of any person other than the Secretary of State to bring proceedings in respect of the matters to which this section applies.
(1) Without prejudice to section 61 above, a contravention of—
(a) any rules or regulations made under this Chapter;
(b) any conditions imposed under section 50 above;
(c) any requirements imposed by an order under section 58(3) above;
(d) the duty imposed by section 59(6) above,
shall be actionable at the suit of a person who suffers loss as a result of the contravention subject to the defences and other incidents applying to actions for breach of statutory duty.
(2) Subsection (1) applies also to a contravention by a member of a recognised self-regulating organisation or a person certified by a recognised professional body of any rules of the organisation or body relating to a matter in respect of which rules or regulations have been or could be made under this Chapter in relation to an authorised person who is not such a member or so certified.
(3) Subsection (1) above does not apply—
(a) to a contravention of rules made under section 49 or conditions imposed under section 50 in connection with an alteration of the requirements of those rules; or
(b) by virtue of subsection (2) above to a contravention of rules relating to a matter in respect of which rules have been or could be made under section 49.
(4) A person shall not be guilty of an offence by reason of any contravention to which subsection (1) above applies or of a contravention of rules made under section 49 above or such conditions as are mentioned in subsection (3)(a) above and no such contravention shall invalidate any transaction.
(1) No action in respect of a contravention to which section 62 above applies shall lie at the suit of a person other than a private investor, except in such circumstances as may be specified by regulations made by the Secretary of State.
(2) The meaning of the expression “private investor” for the purposes of subsection (1) shall be defined by regulations made by the Secretary of State.
(3) Regulations under subsection (1) may make different provision with respect to different cases.
(4) The Secretary of State shall, before making any regulations affecting the right to bring an action in respect of a contravention of any rules or regulations made by a person other than himself, consult that person.
(1) No contract to which this section applies shall be void or unenforceable by reason of—
(a) section 18 of the Gaming Act 1845, section 1 of the Gaming Act 1892 or any corresponding provisions in force in Northern Ireland; or
(b) any rule of the law of Scotland whereby a contract by way of gaming or wagering is not legally enforceable.
(2) This section applies to any contract entered into by either or each party by way of business and the making or performance of which by either party constitutes an activity which falls within paragraph 12 of Schedule 1 to this Act or would do so apart from Parts III and IV of that Schedule.
63A Application of designated rules and regulations to members of self-regulating organisations.
(1) The Secretary of State may in rules and regulations under—
(a) section 48 (conduct of business rules),
(b) section 49 (financial resources rules),
(c) section 55 (clients’ money regulations), or
(d) section 56 (regulations as to unsolicited calls),
designate provisions which apply, to such extent as may be specified, to a member of a recognised self-regulating organisation in respect of investment business in the carrying on of which he is subject to the rules of the organisation.
(2) It may be provided that the designated rules or regulations have effect, generally or to such extent as may be specified, subject to the rules of the organisation.
(3) A member of a recognised self-regulating organisation who contravenes a rule or regulation applying to him by virtue of this section shall be treated as having contravened the rules of the organisation.
(4) It may be provided that, to such extent as may be specified, the designated rules or regulations may not be modified or waived (under section 63B below or section 50) in relation to a member of a recognised self-regulating organisation.
Where such provision is made any modification or waiver previously granted shall cease to have effect, subject to any transitional provision or saving contained in the rules or regulations.
(5) Except as mentioned in subsection (1), the rules and regulations referred to in that subsection do not apply to a member of a recognised self-regulating organisation in respect of investment business in the carrying on of which he is subject to the rules of the organisation.
63B Modification or waiver of designated rules and regulations.
(1) A recognised self-regulating organisation may on the application of a member of the organisation—
(a) modify a rule or regulation designated under section 63A so as to adapt it to his circumstances or to any particular kind of business carried on by him, or
(b) dispense him from compliance with any such rule or regulation, generally or in relation to any particular kind of business carried on by him.
(2) The powers conferred by this section shall not be exercised unless it appears to the organisation—
(a) that compliance with the rule or regulation in question would be unduly burdensome for the applicant having regard to the benefit which compliance would confer on investors, and
(b) that the exercise of those powers will not result in any undue risk to investors.
(3) The powers conferred by this section may be exercised unconditionally or subject to conditions; and section 63A(3) applies in the case of a contravention of a condition as in the case of contravention of a designated rule or regulation.
(4) The reference in paragraph 4(1) of Schedule 2 (requirements for recognition of self-regulating organisations) to monitoring and enforcement of compliance with rules and regulations includes monitoring and enforcement of compliance with conditions imposed by the organisation under this section.
(1) The Secretary of State may issue codes of practice with respect to any matters dealt with by statements of principle issued under section 47A or by rules or regulations made under any provision of this Chapter.
(2) In determining whether a person has failed to comply with a statement of principle—
(a) a failure by him to comply with any relevant provision of a code of practice may be relied on as tending to establish failure to comply with the statement of principle, and
(b) compliance by him with the relevant provisions of a code of practice may be relied on as tending to negative any such failure.
(3) A contravention of a code of practice with respect to a matter dealt with by rules or regulations shall not of itself give rise to any liability or invalidate any transaction; but in determining whether a person’s conduct amounts to contravention of a rule or regulation—
(a) contravention by him of any relevant provision of a code of practice may be relied on as tending to establish liability, and
(b) compliance by him with the relevant provisions of a code of practice may be relied on as tending to negative liability.
(4) Where by virtue of section 63A (application of designated rules and regulations to members of self-regulating organisations) rules or regulations—
(a) do not apply, to any extent, to a member of a recognised self-regulating organisation, or
(b) apply, to any extent, subject to the rules of the organisation,
a code of practice with respect to a matter dealt with by the rules or regulations may contain provision limiting its application to a corresponding extent.
(1) The powers conferred on the Secretary of State by this Chapter shall be exercisable in relation to any authorised person or, except in the case of the power conferred by section 65 below, any appointed representative of his if it appears to the Secretary of State—
(a) that the exercise of the powers is desirable for the protection of investors;
(b) that the authorised person is not fit to carry on investment business of a particular kind or to the extent to which he is carrying it on or proposing to carry it on; or
(c) that the authorised person has contravened any provision of this Act or of any rules or regulations made under it or, in purported compliance with any such provision, has furnished the Secretary of State with false, inaccurate or misleading information or has contravened any prohibition or requirement imposed under this Act.
(2) For the purposes of subsection (1)(b) above the Secretary of State may take into account any matters that could be taken into account in deciding whether to withdraw or suspend an authorisation under Chapter III of this Part of this Act.
(3) The powers conferred by this Chapter may be exercised in relation to a person whose authorisation is suspended under section 28 above or who is the subject of a direction under section 33(1)(b) above and references in this Chapter to an authorised person shall be construed accordingly.
(4) The powers conferred by this Chapter shall not be exercisable in relation to—
(a) an authorised person who is a member of a recognised self-regulating organisation or a person certified by a recognised professional body and is subject to the rules of such an organisation or body in carrying on all the investment business carried on by him; or
(b) an appointed representative whose principal or, in the case of such a representative with more than one principal, each of whose principals is a member of such an organisation or body and is subject to the rules of such an organisation or body in carrying on the investment business in respect of which his principal or each of his principals has accepted responsibility for his activities;
except that the powers conferred by virtue of section 67(1)(b) below may on any of the grounds specified in subsection (1) above be exercised in relation to such a person at the request of any such organisation of which he or, in the case of an appointed representative, any of his principals is a member or any such body by which he or, as the case may be, any of his principals is certified.
(1) The Secretary of State may prohibit an authorised person from—
(a) entering into transactions of any specified kind or entering into them except in specified circumstances or to a specified extent;
(b) soliciting business from persons of a specified kind or otherwise than from such persons or in a specified country or territory outside the United Kingdom;
(c) carrying on business in a specified manner or otherwise than in a specified manner.
(2) A prohibition under this section may relate to transactions entered into in connection with or for the purposes of investment business or to other business which is carried on in connection with or for the purposes of investment business.
(1) The Secretary of State may prohibit an authorised person or appointed representative from disposing of or otherwise dealing with any assets, or any specified assets, of that person or, as the case may be, representative in any specified manner or otherwise than in a specified manner.
(2) A prohibition under this section may relate to assets outside the United Kingdom.
(1) The Secretary of State may impose a requirement that all assets, or all assets of any specified class or description, which at any time while the requirement is in force—
(a) belong to an authorised person or appointed representative; or
(b) belong to investors and are held by or to the order of an authorised person or appointed representative,
shall be transferred to and held by a trustee approved by the Secretary of State.
(2) Where a requirement is imposed under this section it shall be the duty of the authorised person or, as the case may be, appointed representative to transfer the assets to the trustee and to give him all such other assistance as may be required to enable him to discharge his functions in accordance with the requirement.
(3) Assets held by a trustee in accordance with a requirement under this section shall not be released or dealt with except in accordance with directions given by the Secretary of State or in such circumstances as may be specified by him.
(4) A requirement under this section may relate to assets outside the United Kingdom.
(1) The Secretary of State may require an authorised person or appointed representative to maintain in the United Kingdom assets of such value as appears to the Secretary of State to be desirable with a view to ensuring that the authorised person or, as the case may be, appointed representative will be able to meet his liabilities in respect of investment business carried on by him in the United Kingdom.
(2) The Secretary of State may direct that for the purposes of any requirement under this section assets of any specified class or description shall or shall not be taken into account.
The Secretary of State may, either of his own motion or on the application of a person on whom a prohibition or requirement has been imposed under this Chapter, rescind or vary the prohibition or requirement if it appears to the Secretary of State that it is no longer necessary for the prohibition or requirement to take effect or continue in force or, as the case may be, that it should take effect or continue in force in a different form.
(1) The power to impose, rescind or vary a prohibition or requirement under this Chapter shall be exercisable by written notice served by the Secretary of State on the person concerned; and any such notice shall take effect on such date as is specified in the notice.
(2) If the Secretary of State refuses to rescind or vary a prohibition or requirement on the application of the person to whom it applies he shall serve that person with a written notice of the refusal.
(3) A notice imposing a prohibition or requirement, or varying a prohibition or requirement otherwise than on the application of the person to whom it applies, and a notice under subsection (2) above shall state the reasons for which the prohibition or requirement was imposed or varied or, as the case may be, why the application was refused.
(4) Where the reasons stated in a notice to which subsection (3) above applies relate specifically to matters which—
(a) refer to a person identified in the notice other than the person to whom the prohibition or requirement applies; and
(b) are in the opinion of the Secretary of State prejudicial to that person in any office or employment,
the Secretary of State shall, unless he considers it impracticable to do so, serve a copy of the notice on that person.
(5) A notice to which subsection (3) above applies shall give particulars of the right to have the case referred to the Tribunal under Chapter IX of this Part of this Act.
(6) The Secretary of State may give public notice of any prohibition or requirement imposed by him under this Chapter and of the rescission and variation of any such prohibition or requirement; and any such notice may, if the Secretary of State thinks fit, include a statement of the reasons for which the prohibition or requirement was imposed, rescinded or varied.
(1) Sections 60, 61, and 62 above shall have effect in relation to a contravention of a prohibition or requirement imposed under this Chapter as they have effect in relation to any such contravention as is mentioned in those sections.
(2) In its application by virtue of this section, section 62(2) shall have effect with the substitution—
(a) for the reference to the rules of a recognised self-regulating organisation of a reference to any prohibition or requirement imposed by it in the exercise of powers for purposes corresponding to those of this Chapter; and
(b) for the reference to the rules of a recognised professional body of a reference to any prohibition or requirement imposed in the exercise of powers for such purposes by that body or by any other body or person having functions in respect of the enforcement of the recognised professional body’s rules relating to the carrying on of investment business.
(3) This section is without prejudice to any equitable remedy available in respect of property which by virtue of a requirement under section 67 above is subject to a trust.
(1) On a petition presented by the Secretary of State by virtue of this section, the court having jurisdiction under the Insolvency Act 1986 may wind up an authorised person or appointed representative to whom this subsection applies if—
(a) the person is unable to pay his debts within the meaning of section 123 or, as the case may be, section 221 of that Act; or
(b) the court is of the opinion that it is just and equitable that the person should be wound up.
(2) Subsection (1) above applies to any authorised person, any person whose authorisation is suspended under section 28 above or who is the subject of a direction under section 33(1)(b) above or any appointed representative who is—
(a) a company within the meaning of section 735 of the Companies Act 1985;
(b) an unregistered company within the meaning of section 220 of the Insolvency Act 1986;
(c) an oversea company within the meaning of section 744 of the Companies Act 1985; or
(d) a partnership.
(3) For the purposes of a petition under subsection (1) above a person who defaults in an obligation to pay any sum due and payable under any investment agreement shall be deemed to be unable to pay his debts.
(4) Where a petition is presented under subsection (1) above for the winding up of a partnership on the ground mentioned in paragraph (b) of subsection (1) above or, in Scotland, on a ground mentioned in paragraph (a) or (b) of that subsection, the court shall have jurisdiction and the Insolvency Act 1986 shall have effect as if the partnership were an unregistered company within the meaning of section 220 of that Act.
(5) The Secretary of State shall not present a petition under subsection (1) above for the winding up of any person who is an authorised person by virtue of membership of a recognised self-regulating organisation or certification by a recognised professional body and is subject to the rules of the organisation or body in the carrying on of all investment business carried on by him, unless that organisation or body has consented to his doing so.
(6) Subsection (5) above does not apply to the presentation of a petition under subsection (1) above for the winding up of an investment company with variable capital.