FINAL NOTICE

TAKE NOTICE: The Financial Services Authority of 25 The North Colonnade,
Canary Wharf, London E14 5HS (“the FSA”) gives Clark Rees LLP final notice
about the cancellation of its Part IV permission to carry on regulated activities:

1.
ACTION

1.1
The FSA gave Clark Rees LLP (“the LLP”) a Decision Notice on 25
November 2010 (“the Decision Notice”) which stated that, pursuant to section
45 of the Financial Services and Markets Act 2000 (“the Act”), it had decided
to cancel the Part IV permission granted to the LLP. This was because the
LLP was failing to satisfy Threshold Condition 4 (Adequate Resources) and
Threshold Condition 5 (Suitability) set out in Schedule 6 to the Act.

1.2
The LLP agreed to settle at any early stage of the FSA’s investigation.
Accordingly, the FSA has today cancelled the LLP’s Part IV permission.

2.
REASONS FOR THE ACTION

2.1
By a Final Notice dated 25 November 2010, having concluded that Mr Ceri
Rees (“Mr Rees”) is not a fit and proper person, pursuant to section 63 of the
Act, the FSA withdrew Mr Rees’s approval to perform the controlled function
of CF4 (Partner) at the LLP.

2.2
Mr Rees was the only approved person and partner at the LLP. For the
reasons given in the FSA’s Final Notice dated 25 November 2010, the FSA
concluded that Mr Rees did not have the necessary competence and capability
to ensure that the LLP met its regulatory requirements. Therefore, the LLP
was not able to satisfy the FSA that was is fit and proper having regard to all
the circumstances.

2.3
As Mr Rees was not fit and proper, the LLP failed to satisfy the threshold
conditions set out in Schedule 6 to the Act (the “Threshold Conditions”) in
that, in the opinion of the FSA, the LLP did not have adequate resources in
relation to the regulated activities it sought to carry on. Specifically, the LLP
did not have adequate human resources (Threshold Condition 4). In addition,
as the FSA concluded that Mr Rees was not fit and proper, the LLP was
accordingly likely to fail to satisfy Threshold Condition 5 (Suitability).

3.
STATUTORY PROVISIONS, REGULATORY REQUIREMENTS AND
GUIDANCE

3.1
The relevant statutory provisions, regulatory guidance and policy are set out as
an Annex to this Notice.

4.
DECISION MAKER

4.1
The decision that gave rise to the obligation to give this Final Notice was made
on behalf of the FSA by Settlement Decision Makers for purposes of the
FSA’s Decision Procedure and Penalties Manual.

IMPORTANT

4.2
This Final Notice is given to the LLP in accordance with section 390 of the
Act. The following rights are important.

Confidentiality and publicity

4.3
Sections 391(4), 392(6) and 391(7) of the Act apply to the publication of
information about the matter to which this Final Notice relates. Under those
provisions, the FSA must publish such information about the matter to which
this Notice relates as the FSA considers appropriate. The information may be
published in such manner as the FSA considers appropriate. However, the
FSA may not publish information if such publication would, in the opinion of
the FSA, be unfair to the LLP or prejudicial to the interests of consumers.

4.4
The FSA intends to publish such information about the matter to which this
Final Notice relates as it considers appropriate.

FSA contacts

4.5
For more information concerning this matter generally, you should contact
Chris Walmsley of the Enforcement and Financial Crime Division of the FSA
(direct telephone line: 020 7066 5894).

Tom Spender
Head of Department
Enforcement and Financial Crime Division

ANNEX

STATUTORY PROVISIONS, REGULATORY GUIDANCE AND POLICY

1)
The FSA’s regulatory objectives, as set out in section 2(2) of the Act, include
market confidence, the protection of consumers and the reduction of financial
crime.

2)
Section 41 and Schedule 6 to the Act set out the threshold conditions, which
are conditions that the FSA must ensure a firm will satisfy, and continue to
satisfy, in relation to regulated activities for which it has permission.

3)
Paragraph 4 of Schedule 6 to the Act states that the resources of the person
concerned must, in the opinion of the FSA, be adequate in relation to the
regulated activities that he seeks to carry on, or carries on (threshold condition
4: Adequate Resources).

4)
Paragraph 5 of Schedule 6 to the Act states that the person concerned must
satisfy the FSA that he is a fit and proper person having regard to all the
circumstances including the need to ensure that his affairs are conducted
soundly and prudently (threshold condition 5: Suitability).

5)
The FSA's Handbook includes guidance as to the threshold conditions
("COND"). COND 2.4.2G(2) states that the
will interpret the term
FSA

"adequate" in relation to threshold condition 4 as meaning sufficient in terms of
quantity, quality and availability, and "resources" as including all financial resources,
non-financial resources and means of managing resources; for example, capital,
provisions against liabilities, holdings of or access to cash and other liquid assets,
human resources and effective means by which to manage risks.

6)
2.4.4G(2)(c) states that the FSA will consider in this context whether there are
any implications for the adequacy of the
resources arising from the history of
firm's

the
; for example, whether the
has been adjudged bankrupt
firm
firm
.

7)
COND 2.5.4G and COND 2.5.6G give guidance as to whether a firm satisfies
threshold condition 5. They state that the FSA will have regard to whether,
among other things:

(1)
the firm is conducting its business with integrity and in compliance
with proper standards (COND 2.5.4G(2)(a)), including whether the
firm has been open and co-operative in all its dealings with the FSA in
accordance with Principle 11 of the FSA’s Principles for Businesses,

(2)
is ready, willing and organised to comply with the requirements and
standards under the regulatory system (COND 2.5.6G(1)); and

(3)
whether the firm has contravened, or is connected with any person who
has contravened, any provision of the Act or the regulatory system
(COND 2.5.6G(4)).