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Status: You are viewing the version of the handbook as on 2005-06-30.

ENF 9.4 The FSA's power to apply to the court for restitution

ENF 9.4.1G

The FSA's power to apply to the court for an order for restitution where a person, whether authorised or not, has breached a relevant requirement of the Act is contained in section 382 of the Act (Restitution orders). The Secretary of State may also apply for an order for restitution under this section of the Act.

ENF 9.4.2G

Section 382 states that:

  1. (1)

    ' the court may, on the application of the FSA or the Secretary of State, make an order if it is satisfied that a person has contravened a relevant requirement (see ENF 9.4.4 G), or been knowingly concerned in the contravention of such a requirement, and:

    1. (a)

      that profits have accrued to him as a result of the contravention; or

    2. (b)

      that one or more persons have suffered loss or been otherwise adversely affected as a result of the contravention;

  2. (2)

    the court may order the person concerned to pay to the FSA such sum as appears to the court to be just having regard:

    1. (a)

      in a case falling within paragraph (1)(a), to the profits which appear to the court to have accrued;

    2. (b)

      in a case falling within paragraph (1)(b), to the extent of the loss or adverse effect; or

    3. (c)

      in a case falling within both these paragraphs, to the profits which appear to the court to have accrued and to the extent of the loss or other adverse effect.'

ENF 9.4.3G

Where the court orders the person concerned to pay restitution, the sum will be paid to the FSA and distributed as the court directs. Section 382(3) provides that any amount paid to the FSA in line with an order under section 382(2) (see ENF 9.4.2 G (2)) must be paid by it to such qualifying person (see ENF 9.4.8 G) or distributed by it amongst such qualifying persons as the court directs.

ENF 9.4.4G

Section 382(9)(a) states that 'in relation to an application by the FSA, 'relevant requirement' means a requirement:

  1. (1)

    which is imposed by or under the Act; or

  2. (2)

    which is imposed by or under any other Act and whose contravention constitutes an offence which the FSA has power to prosecute under the Act (or, in the case of Scotland, which is imposed by or under any other Act and whose contravention constitutes an offence under Part V of the Criminal Justice Act 1993 (insider dealing) or under prescribed regulations relating to money laundering)'.

ENF 9.4.5G

The FSA's power to apply to the court for an order for restitution where a person has engaged in, required or encouraged others to engage in, market abuse is in section 383 of the Act (Restitution orders in cases of marketabuse). Section 383(1) and (2) state that the court may, on the application of the FSA, make an order under section 383(4) if it is satisfied:

  1. (1)

    that a person has:

    1. (a)

      engaged in market abuse (section 383(1)(a) of the Act); or

    2. (b)

      by taking or not taking any action, required or encouraged another person or persons to engage in behaviour which, if engaged in by the person concerned, would amount to market abuse (section 383(1)(b) of the Act); and

  2. (2)

    that profits have accrued to him as a result; or that another person has suffered loss or been otherwise adversely affected as a result (section 383(2)(a) and (b) of the Act).

ENF 9.4.6G

However, under section 383(3) of the Act the court may not make an order under section 383(4) if it is satisfied that:

  1. (1)

    the person concerned believed, on reasonable grounds, that his behaviour did not fall within section 383(1)(a) or (b) of the Act (see ENF 9.4.5 G (1)); or

  2. (2)

    he took all reasonable precautions and exercised all due diligence to avoid behaving in a way which fell within section 383(1)(a) or (b) of the Act (see ENF 9.4.5 G (1)).

ENF 9.4.7G

The court may order the person concerned to pay to the FSA such sum as appears to the court to be just having regard to those factors set out in ENF 9.4.2 G (2).

ENF 9.4.8G

Where the court orders the person concerned to pay restitution, the sum will be paid to the FSA and distributed as the court directs. Section 383(5) provides that any amount paid to the FSA in accordance with a restitution order under section 383(4) must be paid by the FSA to a qualifying person (see ENF 9.4.8 G), or distributed between such qualifying persons as the court directs.

ENF 9.4.9G

A 'qualifying person' is a person appearing to the court to be someone:

  1. (1)

    to whom the profits mentioned in ENF 9.4.2 G (1)(a) or ENF 9.4.5 G (2) are attributable; or

  2. (2)

    who has suffered the loss or other adverse affect mentioned in ENF 9.4.2 G (1)(b) or ENF 9.4.5 G (2).