1. Regulated and Prohibited Activities Flashcards
What is a regulated activity?
Specified activity with a specified investment
What does section 19 of the FSMA act state about general prohibition?
No person shall carry out a regulated activity unless authorised or exempt
How would a ‘person’ become authorised by the FCA and/or PRA?
Obtain Part 4A permission
When would the FCA and/or PRA make a prohibition order?
Either regulator may do this if they do not consider the person to be fit or proper
What are the criminal penalties for contravening General Prohibition?
2 years and/or unlimited fines
What are the civil law consequences of contravening the General Prohibition? (usually in response to clients suing the firm for breaching GP)
Restitution order (pay back compensation for losses), Injunction (cease activities), contracts are voidable at the discretion of the investor
What is a defence to contravening the General Prohibition?
Took all necessary precautions and exercised all due diligence to avoid committing the offence.
List all of the MiFiD specified investments
- Shares / Depositary Receipts / Warrants
- Debt Instruments (bonds, gilts, debentures etc.)
- Units in collective investment schemes
- Options (only if on specified investments, currency, precious metals)
- Futures
- CFDs
- Emissions Allowances
List all of the non-MiFid specified investments.
- Lloyd’s syndicates, insurance contracts, funeral plans,
- Regulated mortgages and home finance
- Pension Plans
- Deposits and electronic money
- Rights to specified investments (repos)
- Loans, consumer hire agreements, and other forms of credit
- Benchmarks
Options are only specified investments if they are one of:
- Specified investments
- Currency
- Precious metals
List all specified MiFid activities
- Dealing in investments
- Arranging deals in investments
- Advising on investments
- Managing investments
- Operating MTF or OTF
List all specified non-MiFiD activities.
- Safeguarding and administering investments
- Sending dematerialised instructions e.g electronic money transfers
- Lloyd’s activities, insurance activities, providing funeral plan contracts (car breakdown contracts notably excluded)
- Mortgages
- Managing dormant funds
- Accepting deposits
- Credit references and checks
- Establishing, operating or winding up collective investment schemes
- Agreeing to carry on most regulated activities
List all excluded activities.
- Newspaper and other media
- Providing information
- Unpaid trustees
- Employee share schemes
- Group or joint enterprises
- Absence of holding out (dealing as principal or end user, primary market sale or buyback, derivatives for risk management; commercial purposes).
Common not specified investments
- Property and other tangible assets
- Currencies
- National savings and investment accounts (incl premium bonds)
- Derivatives used for commercial purposes (risk management)
Is part 4a permission required for excluded activities?
No
