Trust status for ‘surpluses’ account set up during wind down of SFA member firm
| Published date | 01 April 1999 |
| Pages | 379-384 |
| Date | 01 April 1999 |
| DOI | https://doi.org/10.1108/eb025024 |
| Author | Joanna Gray |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 7 Number 4
Regulatory and Legal Commentary
Trust status for 'surpluses' account set up
during wind down of SFA member firm
Re Branston & Gothard Ltd
Chancery Division, High Court: David Vaughan QC sitting as a Deputy
Judge of the High Court
Date of Judgment: 22nd January, 1999
Joanna Gray
Reader in Financial Regulation, University of Newcastle upon Tyne, Newcastle Law School,
21-24 Windsor Terrace, Jesmond, Newcastle upon Tyne NE1 7RU; tel: 0191 222 7685;
fax: 0191 212 0064 or tel:/fax: 01669 650 349; e-mail: joanna.gray@newcastle.ac.uk
FACTS
The applicants in this case were the liquida-
tors of Branston & Gothard Ltd. Branston
& Gothard Ltd (Branston & Gothard) were
stockbrokers authorised to conduct invest-
ment business under the Financial Services
Act 1986 by virtue of their membership of
the Securities and Futures Authority (SFA).
Their main business consisted of portfolio
investment management business on behalf
of clients (this business being divided into
discretionary, advisory and execution only
business) and provision of single company
and general PEPs. During the 1990s Bran-
ston & Gothard had contracted out its back
office administrative functions to Carr
Shepphards Ltd. who, as unsecured trade
creditors of Branston & Gothard, were
second respondents in this application.
Unfortunately, Branston & Gothard began
making losses in 1997 which led to SFA
having concerns as to the firm's capital ade-
quacy, reconciliation work as to verification
of securities held and resolution of inquiries.
In light of these concerns SFA served an
intervention order on 2nd April, 1998 pur-
suant to rr 7-12 to 7-19 SFA Rules which
ordered Branston & Gothard to:
'(i) cease forthwith from carrying on any
investment business for which authorisa-
tion is required in accordance with
section 3 of the Financial Services Act
1986,
other than as set out in (ii) to (iv)
below, (ii) to close out all existing
positions held by the firm; (iii) in respect
of non-discretionary client accounts, to
close out existing positions or to transfer
them in accordance with client's instruc-
tions;
(iv) in respect of discretionary
client accounts, to make immediate
arrangements for the orderly transfer of
their accounts to brokers nominated by
the clients, including any dealing
Journal of Financial Regulation
and Compliance, Vol. 7, No. 4,
1999, pp. 379-384
© Henry Stewart Publications,
1358-1988
Page 379
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