Powell & Anor, R v

An offence under section 25 of the Financial Services and Markets Act 2000 is one of strict liability, subject to statutory defences. Dishonesty is therefore unnecessary for conviction. It may nevertheless be relevant to culpability on sentence, as may grossly reckless conduct.

Immediate custody may be justified for sustained and large-scale unauthorised investment solicitation which causes serious losses, is motivated by greed, and continues despite a warning that authorisation is required. Good character, delay, and a lesser role than the scheme’s organiser do not necessarily make a custodial sentence wrong in principle or manifestly excessive.

Powell and Hinkson were convicted at the Crown Court at Southwark of separate specimen counts under section 25 of the Financial Services and Markets Act 2000. Each received 15 months’ imprisonment.

They had been directors of a company which promoted purported high-return spread-trading investments to more than 1,000 people. Neither was authorised by the Financial Services Authority. They directly reassured particular investors that the investments were risk-free or guaranteed, although very little money was invested and substantial losses followed.

They appealed against sentence. Hinkson was granted leave so that both appeals could be determined together. The central issues were whether custody was wrong in principle and whether 15 months was manifestly excessive given their good character, delay, personal mitigation, and the leading role of another director.

1. The appeals were dismissed. The court granted Hinkson leave to appeal, but held that neither 15-month sentence was wrong in principle or manifestly excessive.

2. The offences were serious examples of unauthorised investment activity. The appellants had personally promoted schemes to investors over a significant period, on a large scale, and in breach of legislation intended to protect potential investors and the integrity of financial markets. Their conduct caused serious losses to persons who had trusted them.

3. Although the principal organiser bore greater responsibility, the appellants had significant direct roles as salesmen. Their involvement was not merely technical. They continued after a bank manager had warned that authorisation by the Financial Services Authority was required.

4. Section 25 of the Financial Services and Markets Act 2000 creates a strict-liability offence subject to statutory defences. Dishonesty was not an element requiring proof. However, dishonesty, where present, and grossly reckless behaviour are relevant when assessing an offender’s culpability and position within the range of offending.

5. The appellants’ good character, favourable references, delay between arrest and sentence, family circumstances, and lesser role did not displace the need for custody. Their lack of remorse, their trial stance, greed, and lack of integrity supported the sentencing judge’s conclusion that immediate imprisonment was necessary.

• Court of Appeal (Criminal Division): In [2008] EWCA Crim 1214, dismissed the appellants’ challenges to their 15-month custodial sentences; leave to appeal was granted to Hinkson.
• Crown Court at Southwark: On 7 March 2008, Judge Testar convicted each appellant of a separate section 25 offence under the Financial Services and Markets Act 2000 and sentenced each to 15 months’ imprisonment.
• Earlier trial: The appellants were acquitted of money-laundering allegations. The jury disagreed on the section 25 counts, which were retried.