The Financial Conduct Authority (Respondent) v BlueCrest Capital Management (UK) LLP (Appellant)

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Case summary
Appeal
Change log

Case summary

Case ID

UKSC/2024/0146

Parties

Appellant(s)

BlueCrest Capital Management (UK) LLP

Respondent(s)

The Financial Conduct Authority

Issue

(1) What is the true scope of, and the proper limits on, the statutory power of the FCA to impose a single-firm redress requirement under s.55L of the Financial Services and Markets Act 2000 (“FSMA”)? (2) What is the scope of the jurisdiction of the Upper Tribunal, on a reference under FSMA, to allow the Financial Conduct Authority (the “FCA”) to depart by amendment from the case it has put to a regulated firm in its decision and/or supervisory notices?

Facts

The Applicant is part of the BlueCrest investment management group and has been authorised by the Respondent to provide investment management services since 2010. The Applicant acted as a sub-investment manager of the BlueCrest Capital International fund (the “External Fund”), which was available for investment by professional investors. The Applicant also acted as a sub-investment manager of a fund set up by the BlueCrest group as a vehicle to attract, retain and incentivise staff (the “Internal Fund”). In 2017, the Respondent opened an investigation into the Applicant on the basis that the Applicant might have breached a number of the Respondent’s Principles for Business in the course of its role as sub-investment manager of the External Fund and the Internal Fund. Following its investigation, the Respondent issued the Applicant with two notices. The first, a supervisory notice under s. 55L FSMA imposing a requirement on the Applicant to provide redress to investors in the External Fund as a condition of ongoing authorisation. The second, a decision notice pursuant to s. 206 FSMA (following an earlier warning notice in materially identical terms) imposing a financial penalty on the Applicant. Both these notices were based on an allegation that the Appellant had breached Principle 8 (the obligation to manage conflicts of interest fairly) by failing to properly manage a conflict of interest which was alleged to have arisen by reason of the Appellant acting as sub-investment manager of both the Internal Fund and the External Fund. The Appellant referred the matter directly to the Upper Tribunal (the “UT”). The Respondent sought to amend its Statement of Case (the “Amendment Application”) and the Appellant filed an application to strike out the Respondent’s case on redress (the “Strike-out Application”). The UT granted the Strike-out Application and partially dismissed the Amendment Application. The Respondent appealed the UT Decision to the Court of Appeal (the “CA”). The CA disagreed with the UT’s conclusion in relation to both issues, allowing the Respondent’s appeal. The Appellant now appeals to the Supreme Court.