Financial Conduct Authority v 24hr Trading Academy Ltd & Anor

For summary judgment, investment advice is determined objectively. Information becomes advice where it includes a recommendation, value judgment, or selective presentation likely to influence an investment decision. Educational material, warnings, disclaimers and the recipient’s freedom to exercise independent judgment do not necessarily alter that character.

Under article 25(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, arrangements made with a view to acquiring investments need not cause any particular transaction. The court may grant restitution for profits resulting from contraventions and may include investment returns. Personal liability and injunctions against an individual require separate consideration from the company’s conduct.

The Financial Conduct Authority sought summary judgment against 24HR Trading Academy Limited and Mr Maricar under the Financial Services and Markets Act 2000. The claims concerned trading signals about CFDs, spread betting contracts and options, and referrals of customers to FX brokers.

The FCA alleged unauthorised advising under article 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, arranging deals under article 25, and unlawful financial promotions under section 21 of the Act. It sought declarations, restitution of commissions and injunctions. The central issues were whether the signals constituted advice, whether the referral arrangements fell within article 25(2), and the extent of Mr Maricar’s personal responsibility.

1. Advice. The Signals were objectively recommendations to enter into particular CFD and FX transactions. Advice involves information accompanied by a comment or value judgment, or information selected in a way likely to influence an investment decision. The question is distinct from whether the giver assumed a tortious duty of care. Context is relevant, but the educational setting, warnings, disclaimers and the need for recipients to exercise judgment did not give the defendants a realistic prospect of showing that the Signals were merely information. Summary judgment was therefore granted against the Company on article 53 of the RAO and the General Prohibition.
2. Mr Maricar’s role in transmitting the Signals. This issue was not suitable for summary determination. An individual does not automatically incur personal sanctions merely because he performs activities for a company. The possible significance of commission payments and piercing the corporate veil required consideration at trial.
3. Article 25(2). Article 25(1) and article 25(2) are separate limbs. Article 25(2) concerns arrangements made with a view to a person acquiring investments. It is broader than article 25(1) and does not require a causal link to any particular acquisition. The sponsored-link arrangements, free trials and discounted services were arrangements to which participating customers were parties and were objectively made with a view to customers acquiring CFDs or FX options. The Company had no realistic defence on this issue. Articles 27 and 33 did not arguably apply.
4. Financial promotion. Applying the objective approach in FCA v Avacade Ltd (in liquidation) [2020] Bus LR 1897, the Company’s incentives were invitations or inducements to engage in investment activity and breached section 21 of FSMA.
5. Knowing involvement and remedies. Mr Maricar was knowingly concerned in the Company’s contraventions because he admitted being its moving light. Restitution of £530,695 plus interest at 2% above Bank of England base rate was ordered against him personally under section 382; no restitution order was made against the Company. An injunction under section 380 was granted against the Company restraining further trading signals or investment advice. The court declined summarily to grant equivalent relief against Mr Maricar, and left unresolved whether section 37 of the Senior Courts Act 1981 should be exercised.

First-instance summary judgment application. No earlier decision or appeal was stated in the judgment.