The Financial Conduct Authority is resuming its disciplinary proceedings against Keydata founder Stewart Ford, following the Court of Appeal turning down Mr Ford’s application for permission to appeal against a High Court decision.
On Friday (19 July 2013), the Court of Appeal turned down Mr Ford’s application for permission to appeal against a High Court decision in a judicial review, which ruled that the regulator was able to use two key documents in its case.
Mr Ford applied for a judicial review of the regulator’s use of certain documents as part of its investigation. In May 2011, Mr Ford has accused the now defunct Financial Services Authority of “illegal conduct” and “flagrant and deliberate” breaches of legal rights in its investigation of Keydata.
On 11 October 2011, the High Court found Mr Ford could claim joint privilege with Keydata in respect of two of the eight documents being reviewed. On 12 June 2012, the court ruled that the documents could be used by the regulator in its case. Mr Ford subsequently appealed the decision.
The FCA said: “We are now taking steps to restart disciplinary proceedings against Mr Ford and Keydata.
“We cannot provide further information about our investigation because of confidentiality restrictions on disclosure of information.
“Our ongoing investigation into Keydata and Mr Ford is at an advanced stage. This serious and complex investigation remains a priority for us and we are committed to concluding the matter.”
Keydata Investment Services Ltd was put into administration on 8 June 2009 with PricewaterhouseCoopers appointed as administrator.
On 13 November 2009, the Financial Services Compensation Scheme confirmed Keydata was ‘in default’ and since then the FSCS has been able to compensate most eligible investors.
Last year, Herbert Smith, acting on behalf of the FSCS, sent a letter to those IFA firms whose investor clients received payment from the FSCS in respect of Keydata claims. The letter set out the intention of the FSCS to recover payments from IFA firms to cover compensation paid.
In February 2012, the FSCS confirmed to FTAdviser that it has offered an out of court settlement to advisers that recommended Keydata investments but that have “lower claims”.
A spokesperson for the FSCS said that it was confident a court would find in its favour if it was taken to trial, but that it was seeking to avoid IFAs having to pay “substantial costs”.
Earlier this year, FTAdviser revealed that Kent-based IFA Financial
Escape secured a discount of more than 99 per cent in an out-of-court settlement with the FSCS. Financial Escape paid £400 of the £64,000 lawyers acting on behalf of the FSCS were seeking to recover in relation to compensation paid to clients that invested in Keydata investment funds.
