ENF 2.12 The FSA's policy on notification to the person under investigation
Section 170(2) of the Act (Investigations: general) requires the FSA to give to the person who is the subject of the investigation written notice that it has appointed an investigator, except in relation to the cases set out in section 170(3) (see ENF 2.12.3 G). Under section 170(4), the notice must:
If there is a change in the scope or conduct of the investigation and, in the FSA's opinion, the person under investigation is likely to be significantly prejudiced if not made aware of this, that person must be given written notice of the change (see section 170(9)). It is impossible to give a definitive list of the circumstances in which a person is likely to be significantly prejudiced by not being made aware of the change in the scope or conduct of an investigation. However, this may include situations where there may be unnecessary costs from dealing with an aspect of an investigation which the FSA no longer intends to pursue or where a person may inadvertently incriminate himself by not knowing of the change in scope.
However, under section 170(3), sections 170(2) and (9) (see ENF 2.12.1 G and ENF 2.12.2 G) do not apply if:
- (1)
the investigator is appointed as a result of section 168(1) or (4) (Appointment of persons to carry out investigations in particular cases) (see ENF 2.3.14 G (1) and ENF 2.3.14 G (3)) and the investigating authority believes the notice required would be likely to result in the investigation being frustrated; or
- (2)
the investigator is appointed as a result of section 168(2) (see ENF 2.3.14 G (2)).
Where the Act does not require the FSA to give written notice of the appointment of the investigators, for example where the investigation is into suspected breaches of the general prohibition or market misconduct, the FSA will nevertheless consider notifying the person under investigation when it becomes clear who that person is.
In investigations into possible insider dealing, market abuse, misleading statements and practices offences, or breaches of the general prohibition, the restriction on financial promotion, or the prohibition on promoting collective investment schemes, the investigator may not know the identity of the perpetrator or may be looking into market circumstances at the outset of the investigation rather than investigating a particular person. For example, market abuse investigations may often be prompted by concerns surrounding, for instance, movements in the market price of a particular investment. In those circumstances the FSA will give an indication of the nature and subject matter of the FSA's investigation to those who are required to provide information to assist with the investigation.
However, when it becomes clear who the person under investigation is, the FSA will normally notify him of that fact when it proceeds to exercise its statutory powers to require information from them. But it will not notify the persons under investigation if this would prejudice the FSA's ability to conduct the investigation effectively.
Except where the FSA has issued a warning notice (See DEC 2 Statutory notice procedure: warning notice and decision notice procedure) and the FSA has subsequently discontinued the proceedings, the Act does not require the FSA to provide notification of the termination of an investigation or subsequent enforcement action. However, where the FSA has given a person written notice that it has appointed an investigator and subsequently decides to discontinue the investigation without any present intention to take further action, it will confirm this to the person concerned as soon as it considers it is appropriate to do so, having regard to the circumstances of the case.