The marketing of investments
| Pages | 39-45 |
| DOI | https://doi.org/10.1108/eb024955 |
| Published date | 01 January 1998 |
| Date | 01 January 1998 |
| Author | Nicholas Walmsley |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 6 Number 1
The marketing of investments
Nicholas Walmsley
Received: 6th October, 1997
Eversheds, Manchester Office: London Scottish House, 24 Mount Street, Manchester, M2 3DB;
tel:
0161 837 6288; fax: 0161 832 5337; London office: Senator House, 85 Queen Victoria Street,
London EC4V 4JL; tel: 0171 919 4500; fax: 0171 919 4919
Nicholas Walmsley is a partner at
Ever-
sheds specialising in financial services
law and the regulation of the financial
markets.
ABSTRACT
The complexity of regulations governing
'investment advertisements' is described and
their contribution to investor protection dis-
cussed.
INTRODUCTION
Some years ago, the author complained to
a compliance officer about the complexity
of the regime governing 'investment
advertisements'. The compliance officer
could not see the problem; it was not all
that difficult. All one had to do was: refer
to the Financial Services Act 1986 (FSA);
consider the available exemptions and the
Secretary of State's orders; apply the rele-
vant SRO rules; mix in a few wealth
warnings; check what other rules apply;
verify that any claims made could be
justified; formally record approval of the
advert; and have the advert published. This
process is shown schematically in Figure 1.
FINANCIAL SERVICES ACT (1986)
The FSA regulates the carrying on of
'investment business' in the UK and to that
end it imposes an authorisation require-
ment upon those who conduct investment
business in the UK and restrictions upon
issuing 'investment advertisements' in the
UK. Being familiar with Sch.
1
to the FSA
is the key to understanding the range of
business policed by the UK's endangered
financial services regulators. Paragraph 12
of Sch. 1, for instance, renders 'dealing in
investments' (subject to the available exclu-
sions) an activity requiring authorisation.
On closer examination, it becomes appar-
ent that Para. 12 covers 'buying, selling,
subscribing for or underwriting invest-
ments or offering or agreeing to do so,
either as principal or as an agent'.
Throughout the paragraphs of Part II of
Sch.
1
('activities constituting investment
business'), 'offering' is snared (subject to
the available exclusions) as requiring
authorisation.
Sir Nicolas Browne-Wilkinson's judg-
ment in Securities and Investment Board v.
Pantell [1990] 1 Ch. 426 pondered whether
'by sending circular advertisements from
outside the United Kingdom to persons
within the United Kingdom, Pantell
and its associates were or were not
carrying on an investment business in
the United Kingdom. In my judgment
it is plainly arguable that they were.
They were carrying on an investment
business ... either by offering to deal,
or arrange deals, in investments or by
offering to give investment advice
here...'.
Journal of Financial Regulation
and Compliance, Vol. 6, No. 1,
1998,
pp. 39-45
© Henry Stewart Publications.
1358-1983
Page 39
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