Order against solicitors in defence of Financial Services proceedings were to stand. The powers conferred by s.6(2) and 61(1) were wide and should not be cut down judicially, and the two remedies might overlap. The power found in s.61(1) had two preconditions to be satisfied before it could be exercised, namely (1) a relevant contravention and (2) steps intended to and reasonably capable of remedying that contravention.
Under sections 6(2) and 61(1) of the Financial Services Act 1986, a person knowingly involved in certain contraventions of the act, including a solicitor acting for a company which contravened the act, can be ordered to make restitution to investors, even when he had not received the money.
Although it was not necessary for him to decide the point, Scott LJ commented: ‘Section 5 of the Act provides remedies for individual investors who have entered into investment agreements with persons carrying on unauthorised investment business. Subsection (1) provides that any such agreement
‘shall be unenforceable against the other party [i.e. the investor]; and that 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’ . . The restitutionary and compensatory provisions of section 5 do not in terms identify the person or persons against whom the remedies are available. But it is difficult to see how the section 5 restitutionary remedy could be available against anyone other than the other party to the transaction in question or the party to whom, under the transaction in question, the investor’s money had been paid or transferred. Whether the compensatory remedy available ‘together with’ the restitutionary remedy, could be obtained against an accomplice who was neither a party to the transaction nor a person to whom money or property of the investor had been transferred is equally doubtful. These difficulties do not, however, have to be resolved on this appeal.’
Judges:
Scott LJ, Steyn LJ
Citations:
Gazette 02-Sep-1992, [1993] Ch 256, [1993] 1 All ER 134, [1992] 3 WLR 896, Times 24-Jun-1992
Statutes:
Financial Services Act 1986 5 6(2) 61(1)
Jurisdiction:
England and Wales
Citing:
Appeal from – Securities and Investments Board v Pantell SA (No 2) ChD 9-Aug-1991
A solicitor can be ordered by the court to repay sums of money to investors who innocently paid money to the solicitors client who was carrying out unlawful financial transactions with which the solicitor was concerned. One of the purposes of . .
Cited by:
Cited – Financial Services Authority v Martin and Another CA 25-Nov-2005
The respondents were a firm of solicitors who had acted for a client who carried on an unauthorised investment scheme. The Authority sought to recover losses from them.
Held: The solicitors had been concerned in the investment business, and . .
Lists of cited by and citing cases may be incomplete.
Financial Services, Legal Professions
Updated: 09 February 2022; Ref: scu.89152
