UT-2022-00097 - [2024] UKUT 00352 (TCC)

The Applicant is a limited liability partnership registered in England and Wales. During the Relevant Period the Applicant’s three designated members were Mr Meadows (who held a 60% interest), Jason Lawrence (“Mr Lawrence”) (who held a 20% interest) and Paul Dalton (also held a 20% interest). During the Relevant Period Mr Meadows held the CF 3, (Chief Executive), CF 4 (Partner), CF 10 (Compliance) and CF 11 (Anti-Money Laundering) controlled functions. Mr Lawrence held a CF 4 controlled function.

Prior to its decision to cease carrying on regulated activity in June 2022, the Applicant acted as an interdealer broker that facilitated trades between professional clients and eligible counterparties. The Applicant was never authorised to act for retail customers. Apart from the matters that are the subject of this reference, the Applicant has had a clean disciplinary history with no recorded adverse findings.

The Applicant’s remuneration structure was entrepreneurial; the Applicant’s individual brokers were self-employed consultants and would receive commissions on their broking activity which would then be paid first to the Applicant and then paid on to the broker, less any fees due to the Applicant for providing the necessary trading infrastructure. Nearly all the brokers had set up limited service companies to receive from the Applicant the commissions that they obtained from the trades they brokered. This is not an unusual structure in the industry, and Mr Lawrence was rewarded for his broking activities in this manner.

The size of the Applicant meant that it had no internal specialist compliance resource and relied on external compliance consultants. Mr Meadows as CF 10 relied heavily on the assistance of the Applicant’s external professional compliance advisers, CPA Audit and later Compliance Asset, although Mr Meadows recognised that ultimately as CF 10 he bore the responsibility for compliance.