[2025] UKUT 00185 (TCC)

In Securities and Investment Board v Scandex [1998] 1 WLR 712 (“Scandex”), the Court of Appeal considered a claim brought by the Securities and Investment Board (“SIB”), a predecessor to the Authority, against a director of Scandex, a company incorporated in Denmark. Scandex had contravened s 3 of the Financial Services Act 1986 (“FSA 1986”), which provided that:

“No person shall carry on, or purport to carry on, investment business in the United Kingdom unless he is an authorised person under Chapter III or an exempted person under Chapter IV of this Part of this Act.”

The SIB sought a compensation order against the director under s 6(2) FSA 1986, for having been “knowingly concerned in the contravention” by Scandex of s 3. The director’s defence was that he honestly believed Scandex was authorised to carry on investment business in Denmark and thus was exempt from the requirement to obtain similar authorisation in the United Kingdom.

Millett LJ stated at p 717 that to be “knowingly concerned” so as to be liable under s 6(2), the director had to be knowingly concerned in the contravention. He went on to say that the contravention in this case had three elements: (i) the carrying on of an investment business; (ii) in the United Kingdom; (iii) by a person who is not authorised under FSA 1986. He ruled that to be “knowingly concerned”, the director must have knowledge of all three elements. At p 720, he also endorsed the dictum set out above from Burton v Bevan, saying that the director “is to be judged on the facts as he believed them to be, but on the law as it is”.