Financial Services Authority Limited (formerly the Securities and Investments Board) v Scandex and Another

Published date01 February 1998
Date01 February 1998
AuthorHobhouse LJ,Millett LJ,Otton LJ
Subject MatterAccounting & finance
Journal of Financial Regulation and Compliance Volume 6 Number 2
Court of Appeal sheds light on Section 6(2)
FSA 1986
Financial Services Authority Limited
(formerly the Securities and Investments
Board) v Scandex and Another
Court of Appeal: Civil Division: Hobhouse LJ, Millett LJ, Otton LJ
Date of Judgment: 16th December, 1997
Reported at: Times Law Reports, 20th December, 1997
This case, when it arose at first instance,
was considered last year in the pages of this
Journal (see 'SIB Court Action against
forex trader', Vol. 5(4), Journal of
Regulation and Compliance, December 1997,
Lord Justice Millett, who gave the main
judgment of the Court of Appeal re-stated
the facts thus:
'For present purposes the facts lie in a
very small compass and can be briefly
recounted as follows. Scandex was incor-
porated under Danish law on 1
September 1995. The Respondent was a
share holder of Scandex and its
managing director.
Prior to 1 January 1996 there was no
legislation in Denmark which regulated
the carrying on of investment business in
that country. In December 1995 the
Danish legislature implemented the
provisions of the European Council
Directive on investment services (93/22/
EEC) by enacting for the first time legis-
lation to regulate the carrying on of
investment business in Denmark. The
legislation contained requirements for
authorization and provision for investor
protection, and came into force on 1
January 1996. As from that date it was
unlawful for a person to carry on invest-
ment business in Denmark without
having obtained prior authorization
from the Danish financial services
regulator (Finans). Under transitional
provisions, however, persons who were
already carrying on investment business
prior to 1 January 1996 and who applied
for authorization before 30 June 1996
could continue to offer those services
without prior authorization until their
application was determined or 1 January
whichever was the earlier.
On 28 December 1995 Scandex
submitted an application to Finans for
authorization to carry on investment
business in Denmark. There is some
doubt on the evidence whether in fact
Scandex began to trade before 1 January
1996 so as to be able to take advantage
of the transitional provisions of the
Danish legislation, but the Judge appears
to have accepted that there was sufficient
evidence that this was the case for the
purpose of an application for summary
Journal of Financial Regulation
and Compliance, Vol. 6, No. 2,
pp. 178-183
© Henry Stewart Publications,
Page 184

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