091016 Fsa Interdict Citation)

(LlvtN) Rule14.7(2)

FORM 14.7 Form of citation in petition CITATION Edinburgh,the SiXTeEuT

!1 day of October,2009.

To: StephenAntonia Farley, 15aDublin Street,Edinburgh,EH1 3PG.

IN HER MAJESTY'S NAME AND AUTHORITY, and in the name and authorityof Lord Kinclaven,I, ALAil tujAf-g€\-u oMessenger-At-Arms, 19 Dublin StreetLane South, EHI serve the attachedpetition and interlocutorof the court on you. Edinburgh, 3PX, The interlocutorrequiresyou, if so advised,to lodge answersto the petition and desireand requireyou to pay due respectand obedienceto the Interim Interdict therebygranted. If you intend to lodge answersto the petition you must lodge them at the Office of Court, Court of Session,2 ParliamentSquare,EdinburghEHl IRQ within [21] daysafter the dateof serviceon you of the petition. The dateof serviceis the date statedat the top of this citation unlessservicehas beenby post in which casethe dateof serviceis the day after that date.

ThisI do in thepresence of t)sll€f Edinburgh, EHl 3PX,Witness.

piSU,L

, 19 Dublin StreetLane South,

Messenger-At-Arms l9 Dublin StreetLaneSouth Edinburgh EHl 3PX 0 1 3 15 5 70 1 0 0 lnstructedBy: McGrigors LLP, PrincesExchange,1 Earl Grey Street,Edinburgh,EH3 9AQ, 0r3r 777 7000,HLR/MFM/JMH/FI0062.00001 1

IF YOU ARE UNCERTAIN ABOUT THE EFFECT OF THIS CITATION, you should consulta solicitor,CitizensAdviceBureauor otherlocaladviceagencyor adviser immediately. 73869t

COS\FI4 7.FRM

FORMOF CITATIONPETITION

WALKER LOVE W: www.walkerlove.co.uk E:[email protected]

Messenqers-at-Artns

Sheriff Officers

,\-.^':9 f\

Ce-rh["o,)'

copJ

l*utae./fo

r--

EDNBLRGFtSfrofcoi A TRUECOPY CERTIFY

co'\

CLERKOF SESSION ASSISTANT

f-,uoci?oosq

TIIE FINANCIAL SERVICES AUTHORITY a company limite
15October2009

Lord Kinclaven

R.Dunlop motionof the The LordOrdinary,havingheardCounselon the unopposed No' 9 of for the Petitioners Allowsthe Minuteof Amendment Petitioners, of said in terms be amended to Petition the Allows to be received; Process Stephen Respondent, the Second ent;AelinterimInterdicts Minuteof Amendm to carryon, whetherdirectlyor AntoniaFarley,fromcarryingon or purpofting indirectlyand whetherby his seruants,agentsor otherwise,a regulated Servicesand MarketsAct of s. 19 of the Financial activityin contravention 2000 by the unlawfulacceptingof depositswithin the meaningof the Activities)Order2001 Financial Servicesand MarketsAct 2000 (Regulated as nowamended the Petition of copy a to serve andDecerns; Grantswarrant togetherwith Farley Antonia viz.Stephen on the SecondNamedRespondent, Appoints days; one on a periodof noticeof twenty a copyof this interlocutor to lodgea ceftificateof executionof such the Solicitorfor the Petitioners servicein orocess. 14 bn r|

A.F'*C\^*

U N T OTH E R IGH TH ON OU R ABLETHE LORDSOF COUNCILAND SESSION Minute of Amendment for the Petitioner

in the petition of THE FINANCIALSERVICESAUTHORITY,a companylimitedby guaranteehavingits principalplace CanaryWharf,London of businessal24 f he NorthColonnade, PETITIONER for lnterdictand interdictad interim DUNLOPfor the Petitionercravesthe courtto allowthe Petitionto be amendedas follows: 1. At the end of Statementof Fact 1, by insertingthe following: "Sincepresentationof the Petitionand the grantingof interimordersin September2008,the First Respondentshave been placed in liquidation.The Petitionerthus seeks no furtherorder against the FirstResoondents." 2. In Statementof Fact10, 2.1.

by insertingthe it is necessary...", beforethe penultimate sentencethereof("Accordingly, following: "All

of the actions of the First Resoondentsas hereinbeforenarratedwere undertaken

who was the directingmind and prime under the directionof the Second Respondent, Those actionsamountedto widescaletakingof unlaMul moverin the FirstRespondents. depositsdespitethe lack of authorisationon the part of either Respondentto carry out regulatedactivities.While the liquidationof the First Respondentshas brought the particularCapitalInjectionschemeto an end, the scale of the unlawfuldeposittaking referredto means that the Petitioneris reasonablyapprehensivethat, unless restrained, will, eitheractingaloneor throughsome othercorporatevehicle, the SecondRespondent seek to replicatethe unlawfulactivitieshereinbeforedescribed. 2.2.

", in the penultimate sentencethereof,by deletingthe words and from disposingof or bankaccounts". dealingwiththe moniesheld in the aforementioned

1 C : " N r P o r r b l ' , c i r n a n a g e \ Y N E W S O \ , 1 E \ 2 3 9 6I .2D9O 2C

| 5 O c t o b e r2 0 0 9

In the Prayer of the Petition,by deletingthe words "(a) to interdictthe said Cameron Farley Limited... NationalWestminster Bank,B GeorgeStreet,Edinburgh", and by insertingthereforthe following: "to

interdictthe Second Respondent,StephenAntonia Farley,from carryingon or purportingto carry on, whether directly or indirectlyand whether by his servants,agents or otherwise,a regulatedactivityin contraventionof s.19 of the FinancialServicesand MarketsAct 2O0Oby the unlaMul acceptingof depositswithinthe meaningof the FinancialServicesand MarketsAct 2000 (Regulated Activities) Order2001".

IN RESPECTWHEREOF

2 C : \ N r P o r t b l \ c i u r a n a g c \ Y N E W S OE\'4, J 3 9 6 2 9 2I . D O C I _ 5O c t o b e r2 0 0 9

Edinburgh, Certified a Signed: Date:

UNTOTHE RIGHT HONOURABLETHE LORDS OF COUNCILAND SESSION

Certified Copy The Petition of ard havingits limitedby guarantee AUTHORITYa company TT{EFNANCIAL SERVICES principal placeof businessat 25TheNorth Colonnade,Canary Wharl London,814 5HS

letitioner for Interdict and interdict ad interim

I{UMBLY SF{EWETH:I , l'hat the petitioner is thc FrinancialServicesAuthority, a company limited by guarantee and laving its principal olfices at 25 The North Colonnade,Canary Wharf, Loncion,E14 5HS. The first respondentsare Cameron Farley Limited, a compan)'incolporateCunder the Companies Acts (registration number 05031602) and u'ith its princii>al place of businessat MNB Rusirress!,xc!range,9-i0 St Airdrews Square,Edinburgh, EtI2 2AF. fhe secold responclentis StephenAntolia Farley, residing at The Old Mil! House, 40 Nerv Mills Road" Dalkeith, Eif22 zAQ" The second responCentis the sole
'l'his

court has iurisdiction.

2. That tlie petitioner carries out regulatory functions pursuantto the Financial Services& Marlets Act 2000 ("FS\{A"). The petitioner carries out these ftmctions with a view to nraintailing conficlencein the financial system, promoting public understandingof the filancial s1,stetn,securfutgtiie appropriate degree of protection for consumers, and reducing thc exte;i co tvhich it is possible fbr a businesscarried out in contraventionof the general prohibition to bc rised for a purpose {jonllectcd with financial crime. The

petitioner is empoweredunder FSMA to seek various orders from the court, including interdict, in the eventof a personcontraveninga relevantrequirementof the Act. uNo person may carry on a regulated activity in the 3. Section 19 of FSMA provides:United Kingdom, or purport to do so, unless he is- (a) an authorised person; or (b) an exemptperson." Section22 provides:" (l An activity is a regulated activity for the purposes of this Act if it is an activity of ) a specified kind which is carried on by way of businessand (a) relates to an investmentof a specified kind; or (b) in the case of an activity of a kind whtch is also specifiedfor the purposes ofthis paragraph, is carried on inrelationto property ofany kind' (4) "Investment" includes any asset,right or interest. (5) "Specfied" meansspecifiedin an order made by the Treasury'" Section23 makes it a criminal offence to breachthe generalprohibition in section 19' If an offence under FSMA is committed by a body corporate, an officer of the body corporate is also guilty of the offence if the offence was committed with his consent or connivance, or was attributable to any neglect on the part of the officer. Reference is madeto section400, FSMA.

4.

Section 380 of FSMA authorisesthe petitioner to make application to the Court of Session in the event that there has been, or is likely to be, a contravention of a requirementimposedby or underFSMA. Section380(1),(3) & (6) provide:*(I) If on the application of the Authority..-.thecourt is satisfied(a) that there is a reasonablelikelihood that any person will contrqvenea relevant requirement,or (b) that any person has contravened a relevant requirement and that there is a reasonablelikelihood that the contraventionwill continueor be repeated, the court may make an order restraining (or in Scotland an interdict prohibiting) the contravention.

(3) If, on the application of the Authority.....thecourt is satisfiedthat any person may have (a) contraveneda relevantrequirement,or (b) beenknowingly concernedin the contraventionof such a requirement, it may make an order restraining (or in Scotland,an interdict prohibiting) him from disposing of, or otherwise dealing with, any assets of his which it is satisf ed he is

reasonably likely to dispose of or otherwise deal with' " (6) " Relevantrequirement (a) in relation to an application by the Authority, meansa requirement (i) which is imposedby or under this Act --."

5 . That the first and second respondentsare not authorised in terms of FSMA to conduct any regUlatedactivity. The petitioner has become aware that the first respondentsare "Capital lnjection" to their clients. The petitioner has offering an investmentcalled a been provided with copies of four documentswhich the first respondentshave been providing to their clients. Thesefour documentsare (i) generalterms & conditionsfor the capital injection, (ii) an interim agreement,(iii) a letter of intent in relation to profit sharing, and (iv) a notification form. The general terms & conditions, interim agreementand letter ofintent have been signedby the secondrespondenton or about June2007. copies of thesefour documentsare producedherewith.

6 . That in terms of thesedocuments,the first respondentsinvite clients to invest between f1,000 and f1,000,000 in the first respondents.The general conditions state that "Capital injecttons in Cameron Farley Ltd are capital injections only and do not represent share capital or any right to exercise any control over Cameron Farley No indication is provided in the documentationas to how the first respondents will use the monies to fund a return for the client. The client is offered a return by way of interest comprising (a) a fixed rate of 9.25% per annum, and (b) a variable rate at

,//,.

the discretionof the first respondents.The client is also offered a profit sharewhereby the client is entitled to a share in the profit on any capital gain if the whole share is capital or businessof the first respondentsis sold. The calculationof the profit share at the absolutediscretionof the secondrespondentwith no clearly defined criteria. The "account document" will be issued which is the general conditions provide that an clients' certificate confirming the capital injection amount. The general conditions state that the client may give written notice requesting repayment of the capital "Cameron Farley Limited will transfer the value of injection. On the repayment date, your account with Cameron Farley Ltd to the capital injector". The client may also sive notice to closetheir account. or 7. That the documentationinvites customersto pay money by way of cheque, cash bank transfer into two Capital Injection Accounts held by the first respondents-These bank accounts are held with the National Westminster Bank at 8 George Street,

Edinburgh (sort code 60 30 20). The bank accountsare identified in the documentsas having account numbers 28096991 and NXNF JSQG-USD00. The petitioner has received information that bank account 28096991 has had approximately f24.5 million credited over the previous 12 months and that the balance as at 28 August 2008 was fL,165,364.Bank accountNXNF JSQG-USD00had a balanceon 28 August 2 0 0 8o f $ i , 1 6 5 , 9 0 7 .

8. That the petitioner has had reason to be concerned about the activities of the respondents,including the information given by them in responseto the petitioner. In about June 2005, the petitioner made investigationswith the respondentsin respectof possible unregulated activity. In the course of those investigations,the petitioner discovered that the first respondents' website included a claim that the second respondenthad completeda Securitieslnstitute Certificatein InvestmentManagement whereasthe petitioner's inquiries revealedthat he had failed these exams and did not hold such a certificate.On about 19 December 2005, the second respondentadvised the petitioner that he had become an authorised representativeof Personal Touch Financial ServicesLtd. Subsequentlyinquiries revealedthat PersonalTouch Financial ServicesLtd had rejectedhis two applicationsfor authorisation.At an unannounced site visit on 4 April 2007, the second respondentinitially advised the petitioner's officers that all foreign exchangedealing for clients was organised through a US company called Gain. The second respondentsubsequentlyadmitted that the first respondentscarried out some foreign exchangedealings on behalf of clients. In an application for authorisation submitted to the petitioner on behalf of a related company, Cameron Farley InvestmentsLimited, the second respondentintentionally failed to disclosepreviousinvestigationswhich the petitionerhad had into his business activities. The petitioner has also become aware that the second respondenthas a conviction for theft from 1991 and served a period of imprisonment following a conviction for fraud in 1993.

9. That the petitioner has reasonablecauseto believe that the first respondentsare carrying out a regulatedactivity, namely acceptingdeposits,without being authorisedto do so in terms of FSMA. The Financial Servicesand Markets Act 2000 (Regulated Activities) Order 2001, article 5, defines the circumstancesin which the acceptingof depositsis a specifiedkind of activity. Article 5 provides:* (l) Accepting deposits ts a specified kind of activity if(a) money received by *oy of deposit is lent to others, or (b) any other activity of the person acceptingthe deposit is financed wholly

or to a material extent,out of the capital of or intereston moneyreceivedby way of deposit. (2) In paragraph (1), "deposit" means a sum of money, other than one excluded by any of articles 6 to 9A, paid on terms (a) under which it will be repaid, with or without interest or premium and either on demand or at a time or in circumstancesagreed by or on behalf of the person making the payment and the person receiving it, and ft) which are not referable to the provision of property (other than currency) or services or the giving of security. (3) For the purposes of paragraph (2), money is paid on terms which are referable to the provision of property or services or the giving of security if, and only f, (a) it is paid by way of advance or part payment under a contract for the sale, hire, or other provision of property or services, and is repayable only in the event that the property or seryices is or are not in fact sold, hired, or otherwiseprovided; (b) it is paid by way of security for the performance of a contract or by way of security in respect of loss which may result Jiom the non-performance of a contract; or (c) without prejudice to sub-paragraph (b), it is paid by way of security for the delivery up or return of any property, whether in a particular state of " repair or otherwise.

10. That the first respondentsare accepting sums of money of between f1,000 and f1,000,000 which are repayableon notice being given by the client. The sums accepted are purportedly being used as capital to fund the business activities of the first respondents.The investmentbeing offered by the first respondentsis not coveredby any of the exclusions in the said Order. The first respondentshave no authorisationunder I-SMA, nor are they exempt from the requirements of FSMA. ln the foregoing circumstances,the first respondentsare taking part in deposittaking activities without any authorisation to do so in terms of FSMA. The first respondentshave contraveneda relevantrequirementof FSMA and there is a reasonablelikelihood that they will continue to contravenesuch a requirement.Substantialsums are held in the first respondents'bank accountsdue to the illegal deposit taking activities. It is necessaryto obtain an order prohibiting the respondentsfrom dealing with any of the monies in the bank accounts pending determinationof the full extent of the illegal deposit taking activities. Further, the petitioner's experienceis that illegal deposittaking schemesoften result in substantial lossesto clientswith subsequent allegationsof fraud being made.The first respondents'

bank statementsidentifu large depositsfrom investorsand regular sums being paid out to investorsbut there is little or no evidence that the returns to investorsare funded fiom genuineinvestmentreturns.Accordingly, it is necessaryfor the petitionerto seekinterdict restrainingthe respondentsfrom engagingin illegal deposittaking, and from disposingof or dealing with the monies held in the aforementionedbank accounts"Having regard to the balanceofconvenience,interdict ad interim is also sought.

11. This petition is presentedat common law and under section380 of FSMA.

PLEAS-IN-LAW t.

The petitioner having reasonablegtounds to apprehendthat the respondentshave been engaged in illegal deposit taking and continue to be so engaged,interdict should be pronouncedas prayedfor.

2. The balance of conveniencefavouring the granting of interdict ad interim such order shouldbe pronounced..

MAY

IT

TF{EREFORE

please your

I-ordshipsto intimate this applicationon the Walls; to appoint the sameto be servedupon the persons named and designed in the Schedule hereto; to appoint them to lodge Answers hereto, if so advised,within twenty one days of such intimation and service;and thereafter, with or without answers, (a) to interdict the said Cameron Farley Limited and

Stephen Antonia

Farley, whether

directly or indirectly and whether by their servants,agentsor otherwise,from carrying on or purporting to carry on a regulated activify in the United Kingdom and that by accepting deposits in terms of a purported Capital lnjection scheme,and (b) to interdict the said Cameron Farley Limited

and

StephenAntonia Farley, whetherpersonally or through their servants or agents, from

disposing of, or otherwisedealing with, any monies held in the first respondents' bank accounts (account numbers 28096991 and NXNF

JSQG-USD00) held

with

National Westminster Bank, 8

the

George

Street, Edinburgh; and for such interdict ad interirU; and to find the respondentsand any other person opposingthis application liable to the petitioner in the expenseshereto; and to decem; or to do further or otherwisein the premises as to your Lordships shall seem proper.

According to Justice,etc,

SCI{EDULE FOR SERVICE

Personsupon whom serviceis sought in common form:-

1. CameronFarley Limited, MWB BusinessExchange,9-10 St Andrews Square,Edinburgh,

EHz2AF. 2.

StephenAntonia Farley,The Old Mill House,40 New Mills Road, Dalkeith, EH222AQ

3.

National WestminsterBank, 8 GeorgeStreet,Edinburgh

Certified Copy

The Petition of

(rES fufUrAtl fit i*r.{uA4/S-a.(-N for

lmd__b{cj{o.rUlNTd}{T }D iNtdiNA

tlP McGRIGORS

FRHE'J9H.HANGE STREET 1 EARLGREY EDINBURGH EH39AO

DX.72gn|

EDINBURGH€

noocz Il'{ . u{N\\-*lruvnl D

(

r