Court of Appeal rules on solicitor's liability to make redress to investors
| Date | 01 April 2006 |
| DOI | https://doi.org/10.1108/13581980610659512 |
| Published date | 01 April 2006 |
| Pages | 210-216 |
| Author | Joanna Gray |
| Subject Matter | Accounting & finance |
LEGAL AND REGULATORY COMMENTARY
Court of Appeal rules on
solicitor’s liability to make
redress to investors
Joanna Gray
Newcastle Law School, University of Newcastle upon Tyne,
Newcastle upon Tyne, UK
Abstract
Purpose – To report on the appeal by the defendants – a firm of sollcitors – against the proceedings
taken by the Financial Services Authority.
Design/methodology/approach – Outlines the facts and explains the decision.
Findings – Finds that this decision serves to illustrate how difficult and fine-turned a task it is to
achieve in law effective yet fair transition between one complex regulatory regime with another that is
not precisely identical in terms of its intended effects and application.
Originality/value – Shows a reason why the level of enthusiasm for much more radical substantive
legislative change in the FSMA 2000 framework is relatively muted on the part of Government,
regulator and industry alike.
Keywords Law courts, Law, Financialcontrol, Legal decisions
Paper type Viewpoint
Financial Services Authority v(1) John Martin (2) Adrian Sam & Co (a firm) (Court of
Appeal: Chancellor of the High Court, Lord Justice Longmore, Lord Justice Lloyd).
Date of Judgement: 25 November 2005
Facts
The factual background to this appeal lay in proceedings taken by the Financial
Services Authority against both defendants (the appellants in this appeal). The second
defendant was a firm of solicitors (“the firm”) whose two partners were a Mr Sam and
Mr Martin, the latter being the first defendant.
Those proceedingswere taken by FSAin order to secure financialredress for investors
who had dealt with a client of the defendants, a Mr Wilkinson, who had carried on
unauthorisedinvestment business in the UK contrary to the thenoperative prohibition in
section 3 FinancialServices Act 1986. Mr Wilkinson residedin Spain at the material time
but he contacted (either personally or through agents) individuals resident in the UK
invitingthem to buy shares in four companiesat prices specified by him, with instructions
to them to pay the purchase price for the shares into the firm’s client account. Mr
Wilkinson told the investors that his remuneration was limited to 8 percent of any
subsequent increase in value of the shares and that the individual company registrars
would send them share certificates directly. This happened in some cases but not in all,
and some investorsreceived no share certificates.In fact Mr Wilkinson bought the shares
using moniesfrom the firm’s client account fora purchase price of half of the pricehe had
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
JFRC
14,2
210
Journal of Financial Regulation and
Compliance
Vol. 14 No. 2, 2006
pp. 210-216
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581980610659512
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