U.K. FSA Can Prosecute Other Crimes, Court Says

Britain’s financial regulator can prosecute crimes such as money-laundering that aren’t mentioned in the law covering the agency’s powers, a court ruled.
The Court of Appeal in London said the Financial Services Authority can bring charges that aren’t detailed in a 2000 law setting out the FSA’s authority to prosecute.

“Where offenses form part of the same criminality as offenses that the FSA has undoubted power to prosecute it is sensible that they should be capable of being included in the same indictment,” the court said in an Oct. 9 ruling. “The FSA should be able to act as the single prosecutor instead of having to bring in another prosecuting authority.”

The FSA, fighting for its political survival, has said it will toughen enforcement and file more criminal cases. It won its first prosecution of insider trading in March, and the second case to reach a jury trial is scheduled to begin this week.

“What would be interesting is if the FSA decides to prosecute an offense that isn’t attendant to one that it does have the power to prosecute -- so for instance if it just brought a charge of conspiracy to defraud,” said Carlos Conceicao, a former FSA enforcement official now a lawyer at Clifford Chance LLP in London. “It will be interesting to see how soon the FSA tests that out.”

A defendant charged with insider trading and money laundering, and another facing charges of operating a boiler room and laundering money challenged the FSA’s power to prosecute their cases.

‘Boiler Room’

Neil Rollins, 45, was charged by the FSA in January with four counts of insider dealing and four counts of money laundering, the first time the regulator brought both charges at the same time. Rob Rode, Rollins’ lawyer at Leeds, England-based Clarion Solicitors, declined to comment today.

Also appealing the FSA’s powers to prosecute money- laundering, according to the judgment, was Michael McInerney. The FSA alleges he operated a “boiler room,” or illegal share- selling operation. Sarah Wallace, McInerney’s lawyer at London- based Irwin Mitchell LLP, didn’t immediately respond to an e- mail seeking comment.

“We considered it appropriate to bring money-laundering charges in these two prosecutions and we are pleased that our ability to do so has been confirmed by both the crown court and the Court of Appeal,” FSA Spokeswoman Abi Jones said.

Source: Bloomberg by Caroline Binham