ENF 21.6 Factors relevant to determining whether to take disciplinary action in Part VI cases

In determining whether to take disciplinary action, the FSA will consider the full circumstances of each case. A number of factors may be relevant for this purpose. The following list of factors is not exhaustive; not all of these factors may be relevant in a particular case, and there may be other factors that are relevant:

1. (1)

   whether the breach reveals serious or systemic weaknesses in all or part of the person's established procedures for compliance with provisions imposed by or under Part VI of the Act;

2. (2)

   whether the person has brought the misconduct to the attention of the FSA;

3. (3)

   whether the person has admitted the misconduct and provides full and immediate co-operation to the FSA;

4. (4)

   whether the person has previously given any undertakings to the FSA to do or not to do a particular act or engage or not to engage in particular behaviour;

5. (5)

   whether the FSA has previously requested the person to take remedial action, and the extent to which such action has been taken;

6. (6)

   whether the FSA has given any guidance on the conduct in question and the extent to which the person has sought to follow the guidance (the FSA will not take action against a person for behaviour in line with current written guidance or binding oral guidance in the circumstances contemplated by the guidance);

7. (7)

   where other regulatory authorities (including the FSA under other regulatory powers) propose to take action in respect of the same or similar breach which is under consideration by the FSA, the FSA will consider whether their action would be adequate to address the FSA's concerns, or whether it would be appropriate for the FSA to take its own action.

The primary responsibility for ensuring compliance with Part VI of the Act, the Part 6 rules or the prospectus rules, or a provision otherwise made in accordance with the Prospectus Directive or a requirement imposed under such provision rests with the persons identified in section 91(1) and section 91(1A) of the Act respectively. Normally therefore, any disciplinary action taken by the FSA for contraventions of these obligations will in the first instance be against those persons.

However, in the case of a contravention by a person referred to in section 91(1)(a) or section 91(1)(b)(i) or section 91(1A) of the Act ("P"), where the FSA considers that another person who was at the material time a director of P was knowingly concerned in the contravention, the FSA may take disciplinary action that person. In circumstances where the FSA does not consider it appropriate to seek a disciplinary sanction against P (notwithstanding a breach of relevant requirements by such person), the FSA may nonetheless seek a disciplinary sanction against any other person who was at the material time a director of P and was knowingly concerned in the contravention.

Persons discharging managerial responsibilities within an issuer and their connected persons, who has requested or approved the admission of a financial instrument to trading on a regulated market, and connected persons have their own responsibilities under the disclosure rules and transparency rules, as set out in DTR 3 for which they are primarily responsible. Accordingly, disciplinary action for a breach of the disclosure rules and transparency rules will not necessarily involve the issuer.

The Listing Principles are set out in LR 7. The Listing Principles are a general statement of the fundamental obligations of issuers of equities with a primary listing. The Listing Principles derive their authority from the FSA's rule making powers set out in section 74(4) of the Act. A breach of a Listing Principle will make an issuer of equities with a primary listing liable to disciplinary action by the FSA.

In determining whether a Listing Principle has been broken, it is necessary to look to the standard of conduct required by the Listing Principle in question. Under each of the Listing Principles, the onus will be on the FSA to show that an issuer has been at fault in some way. This requirement will differ depending upon the Listing Principle.

In certain cases, it may be appropriate to discipline an issuer on the basis of the Listing Principles alone. Examples include the following:

1. (1)

   where there is no detailed listing rule which prohibits the behaviour in question, but the behaviour clearly contravenes a Listing Principle;

2. (2)

   where an issuer of equities with a primary listing has committed a number of breaches of detailed rules which individually may not merit disciplinary action, but the cumulative effect of which indicates the breach of a Listing Principle.