Restitution and redress

Part

ENF Enforcement

Chapter

Restitution and redress

Printed on: 07/11/2024

Rulebook at: 06/02/2006

ENF 9

Restitution and redress

ENF 9.1

Application and purpose

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Application

ENF 9.1.1

This chapter applies to all firms and persons.

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Purpose

ENF 9.1.2

This chapter sets out the FSA's powers to seek redress for consumers in circumstances where persons, whether authorised or not, have breached a relevant requirement of the Act and gives guidance on how it intends to exercise its powers. The FSA's power to apply to the court for an order for restitution, and its administrative power to require restitution, will help it to pursue its regulatory objectives of protecting consumers and maintaining confidence in the financial system.

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ENF 9.2

Introduction

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ENF 9.2.1

This chapter outlines the FSA's powers to:

(1) apply to the court for an order for restitution where a person, whether authorised or not, has breached a relevant requirement of the Act or has been knowingly concerned in such a breach (section 382 of the Act (Restitution orders));
(2) apply to the court for an order for restitution where a person, whether authorised or not, has engaged in, required or encouraged others to engage in, market abuse (section 383 of the Act (Restitution orders in cases of market abuse));
(3) require restitution by a firm which has contravened a relevant requirement of the Act, or been knowingly concerned in such a contravention (section 384(1) of the Act (Power of FSA to require restitution)); and
(4) require restitution where a person, whether authorised or not, has engaged in, or required or encouraged others to engage in market abuse (section 384(2) of the Act).

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ENF 9.3

The FSA's general approach

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ENF 9.3.1

The FSA will consider exercising its powers to obtain restitution in the light of the facts of each case. When deciding whether to exercise these powers, the FSA will also consider other ways that persons might obtain redress, and whether it would be more efficient or cost-effective for them to use these means instead. The FSA will also consider any proposals by the person concerned to offer redress to any consumers or other persons who have suffered loss, and the adequacy of those proposals, before exercising its powers.

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ENF 9.3.2

The number of instances in which the FSA might consider using its powers to obtain restitution for market counterparties are likely to be limited. Many of the rules which apply to retail consumers will not be relevant to transactions between market counterparties. Transactions between firms classified as market counterparties will be subject to the FSA's Inter-professional Conduct (see MAR 3).

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ENF 9.4

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

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ENF 9.4.1

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.

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ENF 9.4.2

Section 382 states that:

(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:

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

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

(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:

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

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

(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.'

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ENF 9.4.3

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.

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ENF 9.4.4

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

(1) which is imposed by or under the Act; or

(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)'.

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ENF 9.4.5

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 market abuse). 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) that a person has:

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

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ENF 9.4.6

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) 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) 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)).

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ENF 9.4.7

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).

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ENF 9.4.8

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.

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ENF 9.4.9

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

(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) 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).

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ENF 9.5

The FSA's power to require restitution

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ENF 9.5.1

The FSA's administrative power to require restitution from a firm which has breached a relevant requirement is set out in section 384(5) of the Act (Power of FSA to require restitution). This power is exercisable without a court order. Section 384(1) states that the FSA may exercise this power if it is satisfied that a firm has contravened a relevant requirement (see ENF 9.4.4 G), or has been knowingly concerned in a contravention of such a requirement, and:

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

(2) that one or more persons have suffered loss or been adversely affected in any other way as a result of the contravention.

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ENF 9.5.2

Section 384(7) states that a relevant requirement means a requirement-

(1) which is imposed by or under the Act; or

(2) which is imposed by or under any other Act and whose contravention is an offence which the FSA has power to prosecute under the Act.

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ENF 9.5.3

The FSA's administrative power to require restitution in cases where a person, whether authorised or not, has engaged in market abuse is set out in section 384(2) and (3) of the Act. Together section 384(2) and (3) state that the FSA may exercise this power if it is satisfied:

(1) that a person has:

(a) engaged in market abuse (section 384(2)(a)), or
(b) by taking or not taking any action, required or encouraged another person or persons to engage in behaviour which, if engaged in by that person, would amount to market abuse (section 384(2)(b)); and

(2) that he has profited as a result; or that another person has suffered loss or been adversely affected in any other way as a result of the market abuse.

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ENF 9.5.4

However, under section 384(4) of the Act the FSA may not require restitution under section 384(2) if, having considered any representations made in response to a warning notice, there are reasonable grounds for it to be satisfied:

(1) that the person concerned believed, on reasonable grounds, that his behaviour did not fall within section 384(2)(a) or (b) (see ENF 9.5.3 G (1)); or

(2) that he took all reasonable precautions and exercised all due diligence to avoid behaving in a way which fell within section 384(2)(a) or (b) (see ENF 9.5.3 G (1)).

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ENF 9.5.5

The FSA's administrative power to require restitution where there has been a breach of a relevant requirement or market abuse allows the FSA to require the person concerned to pay to the appropriate person (see ENF 9.5.6 G), or share between the appropriate persons identified by the FSA, an amount which the FSA regards as fair. Such an amount will be determined having regard to:

(1) in a case falling within paragraph ENF 9.5.1 G (1) or the first part of ENF 9.5.3 G (2), the profits that appear to the FSA to have been made; or
(2) in a case falling within paragraph ENF 9.5.1 G (2) or the second part of ENF ENF 9.5.1 G (2), the extent of the losses or other adverse effect; or
(3) in a case falling within paragraph ENF 9.5.1 G (2) and ENF 9.5.1 G (2) or both parts of ENF 9.5.1 G (2), the profits that appear to the FSA to have been made and the extent of the loss or other adverse effect.

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ENF 9.5.6

An 'appropriate person' is a person that appears to the FSA to be someone:

(1) to whom the profits referred to in ENF 9.5.1 G (1) or the first part of ENF 9.5.3 G (2) are attributable; or

(2) who has suffered the losses or other adverse effect referred to in ENF 9.5.1 G (2) or the second part of ENF 9.5.3 G (2).

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ENF 9.5.7

Where the FSA proposes to exercise its administrative power under section 384(5) in relation to a person it must give him a warning notice. This must state the amount which the FSA proposes to require the person to pay or distribute in accordance with section 384(5) (see ENF 9.5.5 G). The FSA's policy and procedure in relation to warning notices is set out in DEC 2.2 (Warning notice procedure).

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ENF 9.5.8

Where the FSA decides to exercise its administrative power under section 384(5) in relation to a person it must give him a decision notice. Section 386(2) of the Act (Decision notices) provides that the decision notice must:

(1) state the amount that he is to pay or distribute as mentioned in ENF 9.5.5 G;

(2) identify the person or persons to whom that amount is to be paid or among whom that amount is to be distributed; and

(3) state the arrangements in accordance with which the payment or distribution is to be made.

The FSA's policy and procedure in relation to decision notices is set out in DEC 2.3 (Decision notice procedure).

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ENF 9.5.9

If the FSA decides to exercise its power under section 384(5), the person in relation to whom the power is exercised may refer the matter to the Tribunal. Further information about referrals to the Tribunal is set out in DEC 5.1 (The Tribunal).

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ENF 9.5.10

Where the FSA takes action:

(1) on the decision notice (if the matter has not been referred to Tribunal); or

(2) on the direction of the Tribunal or court (if the matter has been referred to the Tribunal, or later appealed);

it must give a final notice to the person in relation to whom the power is exercised.

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ENF 9.5.11

The provisions relating to final notices in these circumstances are set out in section 390 of the Act (Final notices)(seeDEC 2.3.11 G DEC 2.3.12 G). Section 390(6) states that a final notice to make a payment must state:

(1) the persons to whom;

(2) the manner in which; and

(3) the period in which;

the payment must be made.

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ENF 9.5.12

The obligation imposed on a person by a final notice is enforceable, on application by the FSA, by injunction or, in Scotland, by an order under section 45 of the Court of Session Act 1988.

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ENF 9.6

Criteria for determining whether to exercise powers to obtain restitution

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ENF 9.6.1

The FSA will consider the relevant circumstances of each case when deciding whether it is appropriate to exercise its powers to seek or obtain restitution under sections 382, 383 or 384 of the Act. The factors which the FSA will consider may include, but are not limited to, those set out in ENF 9.6.2 G-ENF 9.6.15 G.

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Are the profits quantifiable?

ENF 9.6.2

The FSA will consider whether quantifiable profits have been made which are owed to identifiable persons. In certain circumstances it may be difficult to prove that the conduct in question has resulted in the person concerned making a profit. It may also be difficult to find out how much profit and to whom the profits are owed. In these cases it may not be appropriate for the FSA to use its powers to obtain restitution.

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Are the losses identifiable?

ENF 9.6.3

The FSA will consider whether there are identifiable persons who can be shown to have suffered quantifiable losses or other adverse effects. In certain circumstances it may be difficult to establish the number and identity of those who have suffered loss as a result of the conduct in question. It may also prove difficult in those cases to establish the amount of that loss and whether the losses have arisen as a result of the conduct in question. In these cases it may not be appropriate for the FSA to use its powers to obtain restitution.

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The number of persons affected.

ENF 9.6.4

The FSA will consider the number of persons who have suffered loss or other adverse effects and the extent of those losses or adverse effects. Where the breach of a relevant requirement by a person, whether authorised or not, results in significant losses, or losses to a large number of persons which collectively are significant, it may be appropriate for the FSA to use its powers to obtain restitution on their behalf. The FSA anticipates that many individual losses resulting from breaches by firms may be more efficiently and effectively redressed by consumers pursuing their claims directly with the firm concerned or through the Financial Ombudsman Service or the compensation scheme where the firm has ceased trading (see ENF 9.6.6 G). However, where a large number of persons have been affected or the losses are substantial it may be more appropriate for the FSA to seek restitution from a firm. In those cases the FSA may consider combining an action seeking restitution from a firm or unauthorised person with disciplinary action or a criminal prosecution.

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FSA costs

ENF 9.6.5

The FSA will consider thecost of securing redress and whether these are justified by the benefit to persons that would result from that action. The FSA will consider the costs of exercising its powers to obtain restitution and, in particular, the costs of any application to the court for an order for restitution, together with the size of any sums that might be recovered as a result. The costs of the action will, to a certain extent, depend on the nature and location of assets from which restitution may be made. In certain circumstances it may be possible for the FSA to recover the costs of exercising its power to apply to the court for an order for restitution, or a proportion of them, from the party against whom a restitution order is sought.

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Is redress available elsewhere?

ENF 9.6.6

The FSA will consider the availability of redress through the Financial Ombudsman Service or the compensation scheme. This will be relevant where the loss has resulted from the conduct of a firm. It will not be relevant where losses have resulted from the conduct of unauthorised persons operating in breach of the general prohibition. The Financial Ombudsman Service and the compensation scheme (where the firm has ceased trading) may be a more efficient and effective method of redress in many cases. The Financial Ombudsman Service provides a way for some consumers to obtain redress The compensation scheme may provide redress for some consumers and businesses. The FSA's power to obtain restitution is not intended to duplicate the functions of the Ombudsman or compensation schemes in those cases. However, in certain cases (see ENF 9.6.2 G) it will be more appropriate for the FSA to pursue restitution. Further details of these schemes are set out in COMP.

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Is redress available through another regulator?

ENF 9.6.7

The FSA will consider the availability of redress through another regulatory authority. Where another regulatory authority, such as the Takeover Panel, is in a position to require appropriate redress, the FSA will not generally exercise its own powers to do so (see ENF 14.9 (Action involving other UK regulatory authorities)). If the FSA does consider that action is appropriate and the matters in question have happened in the context of a takeover bid, the FSA will only take action during the bid in the circumstances set out in ENF 14.9.6 G if the person concerned has responsibilities under the Takeover Code. If another regulatory body has required redress and a person has not met that requirement, the FSA will take this into account and (subject to all other relevant factors and circumstances) may consider it appropriate to take action to ensure that such redress is provided.

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Can persons bring their own proceedings?

ENF 9.6.8

The FSA will consider whether persons who have suffered losses are able to bring their own civil proceedings. In certain circumstances it may be appropriate for persons to bring their own civil proceedings to recover losses. This might be the case where the person who has suffered loss is a market counterparty and so may be expected to have a high degree of financial experience and knowledge. When considering whether this might be a more appropriate method of obtaining redress, the FSA will consider the costs to the person of bringing that action and the likelihood of success in relation to the size of any sums that may be recovered.

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Is the firm solvent?

ENF 9.6.9

The FSA will consider the solvency of the firm or unauthorised person concerned. Where the solvency of the firm or unauthorised person would be placed at risk by the payment of restitution, the FSA will consider whether it is appropriate to seek restitution. In those cases the FSA may consider obtaining a compulsory insolvency order against the firm or unauthorised person rather than restitution (see ENF 9.6.10 G). When considering these options, the FSA may also take account of the position of other creditors who may be prejudiced if the assets of the firm or unauthorised person are used to pay restitution payments prior to insolvency.

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What other powers are available to the FSA?

ENF 9.6.10

(1) The FSA will consider the availability of its power to obtain a compulsory insolvency order against the firm or unauthorised person concerned or to apply to the court for the appointment of a receiver. In certain circumstances it may be appropriate for the FSA to obtain an administration order, winding-up order or bankruptcy order against a firm or unauthorised person carrying out regulated activities in breach of the general prohibition.

(a) Administration orders: the FSA may apply for an administration order against a firm or an unauthorised person operating in breach of the general prohibition. An administrative order places the assets of a firm or unauthorised person under the management of an administrator and may result in the assets of the company being realised to pay creditors. The FSA's procedures in relation to the exercise of its powers to apply for administration orders are set out in ENF 10 (Insolvency proceedings and orders against debt avoidance).

(b) Winding-up orders: the FSA may apply for a winding-up order against a firm or an unauthorised person operating in breach of the general prohibition. A winding-up order places the assets of the firm or unauthorised person under the control of a liquidator who will apply them to repay creditors. The FSA's procedures in relation to the exercise of its powers to apply for winding-up orders are set out in ENF 10.

(c) Bankruptcy orders: the FSA may apply for a bankruptcy order against an individual who is, or has been, an authorised person, or who is carrying on a regulated activity, in breach of the general prohibition. The making of a bankruptcy order places the assets of the individual under the control of a trustee who will use them to repay creditors. The FSA's procedures in relation to the exercise of its powers to apply for bankruptcy orders are set out in ENF 10.

(d) Appointment of receivers: the FSA may apply to the court for the appointment of a receiver on behalf of the debenture holders or other creditors of a person where there is a risk that creditor or debentureholder's assets will be dissipated.

(2) The FSA may decide to exercise its power to obtain a compulsory insolvency order or to apply for the appointment of a receiver rather than to exercise its powers to obtain restitution. This could happen if it has particular concerns about a person's conduct, or financial position and, in particular, whether it is solvent (though the appointment by the court of a receiver is not conditional on the insolvency of the person concerned). The FSA may also consider the cost of compulsory insolvency orders which will be paid out of the assets of the firm, or of the unauthorised person concerned, compared to the cost of seeking restitution. In the case of unauthorised persons operating in breach of the general prohibition, a decision to apply for a compulsory insolvency order rather than restitution will depend on all the circumstances of the case. In particular, the FSA may consider the significance of the unauthorised activities compared to the whole of the business; the nature and conduct of the activities carried on in breach of the general prohibition; and the number and nature of the claims against the person or firm concerned. The FSA's powers to apply for compulsory insolvency orders are set out in ENF 10.

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The behaviour of the persons suffering loss

ENF 9.6.11

The FSA will consider the conduct of the persons who have suffered loss. As part of its regulatory objectives of increasing consumer awareness of the financial system and protecting consumers, the FSA is required to publicise information about the authorised status of persons and is empowered to give information and guidance about the regulation of financial services. This information should help consumers avoid suffering losses. When the FSA considers whether to obtain restitution on behalf of persons, it will consider the extent to which those persons may have contributed to their own loss or failed to take reasonable steps to protect their own interests.

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Other factors which may be relevant.

ENF 9.6.12

The FSA will consider the context of the conduct in question. In any case where the FSA believes that any exercise of its powers under section 383 (Restitution orders in cases of market abuse) or 384 (Power of FSA to require restitution) of the Act may affect the timetable or outcome of a takeover bid, it will consult the Takeover Panel before taking any steps to exercise such powers, and will give due weight to its views.

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ENF 9.6.13

Where the FSA is considering applying to court for a restitution order in relation to market abuse under section 383, it will also consider whether the court would be prevented from making that order by section 383(3). The court cannot make a restitution order against a person under section 383(3) if it is satisfied that one or both of the conditions set out in section 383(3)(a) and (b) are fulfilled (see ENF 9.4.6 G).

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ENF 9.6.14

A similar provision to section 383(3) applies where the FSA proposes to exercise its power to require restitution in relation to market abuse under section 384(2). In those cases, the FSA cannot exercise its power where, following representations made to it in response to a warning notice, there are reasonable grounds for it to be satisfied that one or both of the conditions set out in section 384(4)(a) and (b) are fulfilled (see ENF 9.5.4 G).

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ENF 9.6.15

The conditions set out in section 383(3)(a) and (b) and section 384(4)(a) and (b) are the same as those that apply to penalties for market abuse and the FSA will take the same factors into account when considering whether the conditions have been met. ENF 14.4 (Factors relevant to determining whether to take action in market abuse cases) lists those factors.

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ENF 9.7

The FSA's choice of powers

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ENF 9.7.1

Under sections 382 (Restitution orders) and 383 (Restitution orders in cases of market abuse) of the Act the FSA can apply to the court for an order for restitution. Under section 384 (Power of FSA to require restitution) it can also require restitution from firms which have breached a relevant requirement of the Act and persons, whether authorised or not, who have engaged in, or have required or encouraged others to engage in, market abuse.

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ENF 9.7.2

In cases where it is appropriate to exercise its powers to obtain restitution from firms, the FSA will first consider using its own administrative powers under section 384 before considering taking court action.

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ENF 9.7.3

However, there may be circumstances in which the FSA will choose to use the powers under section 382 or section 383 to apply to the court for an order for restitution against a firm. Those circumstances may include, for example, where:

(1) the FSA wishes to combine an application for an order for restitution with other court action against the firm, for example, where it wishes to apply to the court for an injunction to prevent the firm breaching a relevant requirement of the Act; the FSA's powers to apply for injunctions restraining firms from breaching relevant requirements of the Act are set out in ENF 6;

(2) the FSA wishes to bring related court proceedings against an unauthorised person where the factual basis of those proceedings is likely to be the same as the claim for restitution against the firm;

(3) there is a danger that the assets of the firm may be dissipated; in those cases, the FSA may wish to combine an application to the court for an order for restitution with an application for an asset-freezing injunction to prevent assets from being dissipated; the FSA's powers to apply for asset freezing injunctions are set out in ENF 6;

(4) the FSA suspects that the firm may not comply with an administrative requirement to give restitution; in those cases the FSA may consider that the sanction for breach of a court order may be needed to ensure compliance; a person who fails to comply with a court order may be in contempt of court and is liable to imprisonment, to a fine and/or to have his assets seized.

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ENF 9.7.4

The FSA may not use its administrative power to obtain restitution from unauthorised persons except in cases of market abuse. Most cases where redress is obtained from unauthorised persons will therefore be dealt with by an application to the court.

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ENF 9.8

Determining the amount of restitution

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ENF 9.8.1

When deciding how much should be paid by a firm or individual following an application by the FSA to court for an order for restitution, the court may consider those factors set out in ENF 9.5.2 G (2).

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ENF 9.8.2

Section 382(4) (Restitution orders) and section 383(6) (Restitution orders in cases of market abuse) of the Act state that the court may require the person, whether authorised or not, to supply it with accounts or other information to help the court:

(1) to establish whether and, if so how much, profit may have been made as a result of the contravention; or
(2) to establish whether any persons have suffered any losses or adverse effects as a result of the contravention of a relevant requirement or market abuse and, if so, the extent of those losses or adverse effects; or
(3) to determine how any amounts are to be paid or distributed to qualifying persons.

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ENF 9.8.3

An application by the FSA for an order for restitution under section 382 or 383 will not prevent a person from bringing a private action for restitution in relation to the same matter. However, the court is likely to consider whether any payments have already been made to private claimants when it decides whether to order restitution in any case.

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ENF 9.8.4

When the FSA decides the amount of restitution which a firm or unauthorised person must pay following the exercise of its administrative power to require restitution, it must approach the matter in the same way as the court would in accordance with section 382(5) of the Act.

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ENF 9.8.5

The FSA may obtain information relating to the amount of profits made and/or losses or other adverse effects resulting from the conduct of firms or unauthorised persons as a result of the exercise of its powers to appoint investigators under sections 167 (Appointment of persons to carry out general investigations) or 168 (Appointment of persons to carry out investigations in particular cases) of the Act. The FSA's policy and procedure in respect of its powers to appoint investigators are contained in ENF 2 (Information gathering and investigation powers).

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ENF 9.8.6

As well as obtaining information through the appointment of investigators, the FSA may consider using its power under section 166 of the Act (Reports by skilled persons) to require a firm to provide a report prepared by a skilled person (see ENF 2.3.8 G to ENF 2.3.11 G). That report may be requested to help the FSA to:

(1) determine the amount of profits which have been made by the firm; or

(2) establish whether the conduct of the firm has caused any losses or other adverse effects to qualifying persons and/or the extent of such losses; or

(3) determine how any amounts to be paid by the firm are to be distributed between qualifying persons.

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ENF 9.8.7

The person appointed to make a report under ENF 9.8.6 G must be nominated or approved by the FSA and appear to the FSA to have the necessary skills to report on the matter.

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ENF 9.9

Other relevant powers

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ENF 9.9.1

The FSA may apply to the court for an injunction if it appears that a person, whether authorised or not, is reasonably likely to breach a requirement of the Act or engage in market abuse. It can also apply for an injunction if a person has breached a requirement of the Act or engaged in market abuse and is likely to continue doing so. The FSA's procedure in relation to the exercise of its powers to apply for injunctions is set out in ENF 6 (Injunctions).

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ENF 9.9.2

The FSA may consider taking disciplinary action, or action to impose a penalty for market abuse, as well as seeking restitution, if a person has breached a relevant requirement of the Act or has engaged in, or required or encouraged others to engage in, market abuse. As restitution is essentially restorative it may often be appropriate for the FSA to take disciplinary action. Disciplinary action, or action to impose a penalty for market abuse, may take the form of either:

(1) imposing a financial penalty: the FSA's policy and procedures in relation to imposing financial penalties is set out in ENF 13 (Financial penalties against firms and approved persons) and ENF 14 (Sanctions for market abuse); or
(2) making a public statement of misconduct or public censure: the FSA's policy and procedure in relation to public statements of misconduct is set out in ENF 12 (Public statements of misconduct about firms and approved persons) and ENF 14 (Sanctions for market abuse).

01/12/2004

ENF 9.9.3

The FSA may consider exercising its power to prosecute offences under the Act, as well as applying to seek restitution if a person has breached certain requirements of the Act. The offences the FSA has power to prosecute, and the FSA's policy and procedure in relation to the prosecution of these offences, are set out in ENF 15 (Prosecution of criminal offences).

01/12/2004

ENF 9.10

Publication

01/12/2004

ENF 9.10.1

The FSA considers it generally appropriate to publish details of successful applications to court for restitution, or the exercise of its administrative power to require restitution, in order to protect and inform consumers and maintain market confidence. The FSA's policy in relation to the publication of final notices is set out in DEC 5.2 (Publication). The FSA will normally publish final notices relating to administrative restitution action. However, in certain circumstances it may decide not to publicise that it has obtained an order for restitution or exercised its power to require restitution. It may make that decision where, for example, publication could damage market confidence or undermine market integrity in a way that could be damaging to the interests of consumers. Where the behaviour to which the restitution order or exercise of the FSA's restitutionary power relates has happened in the context of a takeover bid, the FSA will consult the Takeover Panel and, if it believes that publication may affect the timetable or outcome of that bid, will give due weight to the Takeover Panel's views.

01/12/2004