Tribunal bans former trader for lying to the FCA and the Tribunal

Published: 17/12/2013     Last Modified: 19/12/2013

The Upper Tribunal (Tax and Chancery Chamber) has directed the Financial Conduct Authority (FCA) to ban former derivatives trader David John Hobbs from performing any role in regulated financial services.

On 23 July 2010 the FCA issued a Decision Notice to Hobbs that comprised a financial penalty of £175,000 and the imposition of a prohibition order. Hobbs referred the Decision Notice to the Tribunal on 18 August 2010. The hearing of the reference took place between June and July 2012. The Tribunal’s decision was issued to the parties on 22 November 2012. While the Tribunal found that Hobbs had lied to it (and to the FCA) it determined that Hobbs, a proprietary trader at Mizuho International plc, had not committed market abuse in instructing Andrew Charles Kerr, a broker at Sucden, to buy 600 lots of September 2007 coffee futures on the Euronext Liffe exchange in August 2007. Given this finding the Tribunal allowed Hobbs’ reference and directed the FCA to take no action against him.

The FCA appealed the Tribunal’s determination regarding Hobbs’ fitness and propriety (but not its finding on market abuse) to the Court of Appeal. On 29 July 2013 the Court of Appeal held it was incumbent upon the Tribunal to address the question whether, even if Hobbs was not guilty of market abuse, his lying, which the Tribunal found as a fact, demonstrated that he was not a fit and proper person. Accordingly, the Court remitted the matter of fitness and propriety to the Tribunal who heard the matter on 26 November 2013.

The Tribunal found that, in putting forward a false defence to the FCA during the course of its investigation, and in maintaining that defence in evidence before the Tribunal, he had exhibited a lack of integrity such that he is not a fit and proper person.

Tracey McDermott, Director of Enforcement and Financial Crime, said:

“Hobbs misled the FCA during its investigation. He misled the RDC. He misled the Tribunal. Accordingly, he failed to demonstrate the standards of behaviour that we expect of those who hold the privileged position of approved person and failed in his basic responsibility to act with integrity: if you cannot tell the truth there is no place for you in the financial services industry.”

 

Notes for editors

  1. Kerr came to a settlement with the FSA on the basis that his role in the relevant trading amounted to market abuse. The final notice for Andrew Charles Kerr.
  2. A copy of both decisions of the Upper Tribunal can be found on the Tribunal’s website.
  3. A copy of the Court of Appeal’s judgment.
  4. On the 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  5. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  6. Find out more information about the FCA.

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