Rangecourt SA & Ors The Financial Conduct Authority

For Principle 1 of the FCA’s Principles for Business, a firm’s business is identified by considering the employee’s role, the connection between that role and the impugned conduct, and the regulatory purpose of the Principle. Vicarious-liability and agency principles provide useful guidance. A firm may be accountable for senior employees’ improper conduct carried out in the course of their employment, even where formal approval procedures were not followed and personal and corporate interests were intertwined.

Generic investment advice may fall outside the regulated activity of advising on investments where no particular investments have been identified. Preparatory work may nevertheless be ancillary activity connected with designated investment business.

The references arose from regulatory decisions concerning a presentation prepared in 2017. It described a strategy involving market manipulation intended to put pressure on the Qatari currency while protecting Qatari-asset exposures held by UAE banks.

The Bank, Edmund Lloyd Rowland and Vladimir Bolelyy referred decision notices imposing penalties and prohibition orders. David John Rowland made third-party references concerning findings about his influence, knowledge and the purpose of the presentation. The central issues included whether the activity was part of the Bank’s business, whether employees’ conduct could be attributed to the Bank, whether the Individual Conduct Rules applied, the proper penalties, and the reasonableness of prohibition orders.

1. Bank reference. Mr Rowland and Mr Weller produced the Disputed Document in the course of their Bank employment. The relevant inquiry is guided by the nature of the employee’s role, the connection between that role and the conduct, and the objective of Principle 1. The conduct was sufficiently connected with their employment and was intended to benefit both the Bank and wider Rowland interests. Formal approval, Bank branding and internal compliance procedures were not decisive. The conduct was therefore Bank business and was attributable to the Bank (paras [503]-[545], [565]-[570]).
2. The conduct lacked integrity. Integrity is assessed essentially objectively, while taking account of the person’s state of mind and known facts. Dishonesty, lack of an ethical compass, recklessness, turning a blind eye and failing to follow up obvious warning signs may demonstrate a lack of integrity (paras [615]-[617]).
3. The presentation was not advice on particular investments under article 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001/544, because the relevant investments had not been identified. Nor did it amount to arranging deals under article 25. It was, however, an ancillary activity connected with the Bank’s designated investment business (paras [572]-[611]).
4. Mr Rowland’s conduct related to the performance of functions for the Bank and breached Individual Conduct Rule 1. Mr Bolelyy was not excluded from COCON merely because he also acted as a personal assistant. His role included research and analysis, and he understood, or at least turned a blind eye to, the obvious impropriety of the strategy. Autism and junior status did not excuse the conduct or later false accounts (paras [642]-[681]).
5. The Bank’s penalty was reduced to £4m. Mr Rowland’s penalty of £352,000 and Mr Bolelyy’s penalty of £14,200 were confirmed. Prohibition orders against both individuals were within the range of reasonable decisions. The third-party references of Mr David Rowland were dismissed, although the Tribunal rejected the asserted general influence and prior knowledge findings.

The judgment does not describe an appeal from an earlier court decision. The references were made from FCA Decision Notices dated 17 January 2023 following proceedings before the Authority’s Regulatory Decisions Committee.