In October 2010, in our view somewhat controversially, the FSA obtained the right to publish Decision Notices (see Enforcement Watch 4: "FSA presses on with enforcement sanctions changes"1), and this is what it routinely does.

In the Arch Cru matter referred to elsewhere in this edition (see "Raft of serious Arch Cru notices"), the investment manager and two individuals subject to Decision Notices applied to the Upper Tribunal to prevent publication pending the hearing of the matter by the Upper Tribunal. The Upper Tribunal's detailed decision makes interesting and useful reading for practitioners.

The Upper Tribunal Decision

The case was decided by Judge Tim Herrington, who was up until recently the chair of the RDC. Those aspects particularly worthy of note are:

  • The FSA has a discretion whether to publish (see s391 of the Financial Services and Markets Act). The question as to whether the discretion has been properly exercised is not a matter that falls within the jurisdiction of the Upper Tribunal.
  • The Upper Tribunal must instead make its own decision in the context of Rule 14 of the Tribunal rules2:
    • This is subject to the overriding objective of Rule 2 that requires it to deal with cases fairly and justly. Accordingly, this was said to import the requirement that it exercises its power judicially, that is, "taking into account all relevant factors ignoring irrelevant factors and exercising the power in a manner which seeks to give effect to the overriding objective."
    • Para 3(3) of Schedule 3 to the Rules is also relevant. This relates to the power of the Upper Tribunal not to include particulars of a reference on the Register if it is satisfied that it is necessary to do so "having regard in particular to any unfairness to the Applicant."
  • The Upper Tribunal usefully ran through the relevant case law on Rule 14 and Schedule 3 Paragraph 3(3) powers.
  • It concluded that the "open justice principle"3 is to be applied when considering whether to prevent publication of Decision Notices. Therefore, in carrying out the balancing exercise relating to different factors referred to above "it starts with the scales heavily weighted in favour of publication with the burden on the Applicants to produce cogent evidence of how unfairness may arise and how they could suffer a disproportionate level of damage if publication were not prohibited."
  • In running through the relevant factors, the Upper Tribunal found that publication should not in this case be prevented.
  • Tim Herrington was also concerned to ensure that, in publishing the Decision Notices, the FSA made it clear that such decisions were provisional. He set out not only a suggested formulation, but also the prominent position it should appear in in the FSA's press release.

The case has an interesting discussion of, and ultimate rejection of, each of the factors argued by the applicants in support of their application. It demonstrates yet again the high hurdle that an applicant needs to surmount in order to prevent publication. For example, the Upper Tribunal did not accept in this case that the high level of public interest in the matter in and of itself took the matter out of the ordinary run of the mill case where publication can have a detrimental effect on reputation. Nor did it accept that because serious allegations as to integrity were made that this shifted the balance of the case. All this of course is in the context of Decision Notices, which may not even ultimately be upheld by the Upper Tribunal.

(For a discussion on a previous attempt to prevent publication, see Enforcement Watch 5 "26 August 2011: Court allows publication of Decision Notice concerning £8m market abuse fine".)