1

FINAL NOTICE

Reference
Number:
DJH01236

Address:
10 Sovereign Mews
Off Bournwell Close
Cockfosters
Barnet EN4 0JQ

1.
ACTION

1.1.
For the reasons given in this notice, the Authority hereby makes an order

prohibiting David John Hobbs from performing any function in relation to any

regulated activities carried on by any authorised or exempt persons, or exempt

professional firm. This order takes effect from 14 February 2014.

2.
SUMMARY OF REASONS

Procedural background

2.1.
By the Decision Notice dated 23 July 2010 the Authority gave Mr Hobbs notice

that, in light of its findings that Mr Hobbs had committed market abuse and that

he had lied to the Authority during the course of its investigation, it had decided

to impose a financial sanction and a prohibition order on Mr Hobbs.

2.2.
Mr Hobbs referred the matter to the Tribunal. In the First Tribunal Decision the

Tribunal found that Mr Hobbs did not commit market abuse and directed the

Authority to take no action against Mr Hobbs. The First Tribunal Decision can be

found on the Tribunal’s website at:

2.3.
The Authority appealed the Tribunal’s decision not to impose a prohibition order

on Mr Hobbs on the basis of Mr Hobbs’s lying to the Authority, its decision making

committee, and the Tribunal; however, the Authority did not appeal the Tribunal’s

decision that Mr Hobbs did not commit market abuse. In its written decision dated

29 July 2013, the Court of Appeal remitted the matter to the Tribunal for it to

consider whether Mr Hobbs was a fit and proper person based on the Tribunal’s

findings. The Court of Appeal’s decision can be found at:

2.4.
In its Second Written Decision, the Tribunal found that Mr Hobbs was not a fit and

proper person and that the appropriate action was for the Authority to make a

prohibition order pursuant to section 56 of the Act. The Second Tribunal Decision

can be found on the Tribunal’s website at:

2.5.
In light of the above, the Authority has issued this Final Notice.

2.6.
On the basis of the facts and matters set out in the First and Second Tribunal

Decisions and for the reasons set out therein, the Authority has concluded that Mr

Hobbs lacks integrity and is not a fit and proper person to perform functions in

relation to a regulated activity.

2.7.
The First and Second Tribunal Decisions set out fully the Tribunal’s (and thus the

Authority’s) reasons for prohibiting Mr Hobbs and should therefore be read in full.

By
way
of
summary,
the
Authority
notes
the
following
particular

aspects/paragraphs of the First and Second Tribunal Decisions.

2.8.
At paragraph 241 of the First Tribunal Decision the Tribunal concluded that:

“…despite our finding in his favour on the reference before us, Mr Hobbs

emerges from these proceedings with very little credit. We have already

referred to the unsatisfactory nature of the evidence he gave to us. We

have, as we have described, found that his assertions that he was

engaged in a strategy of confusion were false. That is a serious matter.

We can only surmise as to why, in the light of our own findings, Mr

Hobbs thought fit to develop and persist with such a story. We can only

think that he did so as a desperate attempt to explain what he feared

might otherwise be inexplicable, namely what we have concluded, on

balance, were his rambling and nonsensical conversations with Mr Kerr.

That was a grave error. Not only did it cast Mr Hobbs in a poor light. It

could very easily have led to his words being taken completely at face

value, with a different conclusion to this reference.”

2.9.
At paragraph 13 of the Second Tribunal Decision, the Tribunal noted the

significant period of time for which Mr Hobbs maintained the false “strategy of

confusion” story:

“Mr Hobbs had maintained the strategy of confusion story in the

course of the Authority’s investigation. It had first appeared, in a letter

from Mr Hobbs’ then solicitors, as a process of reconstruction whereby

Mr Hobbs believed that he had used certain phrases in an attempt to

obscure his difficult risk position, and resulting lack of flexibility, from

other market participants. It had been maintained, and enlarged upon,

during the subsequent part of the Authority’s investigation, the

decision of the RDC, and through the Tribunal proceedings.”

2.10. At paragraph 29 of the Second Tribunal Decision, the Tribunal concluded that:

“We have no doubt that, viewed independently of the Tribunal’s

findings in respect of market abuse, the conduct of Mr Hobbs in, as the

Tribunal found, lying repeatedly to the Authority and in evidence

before the Tribunal is such that renders him as lacking in integrity, and

consequently as not fit and proper to perform functions in relation to a

regulated activity. Unless relevant factors can be demonstrated

against the imposition of a prohibition order, or which go to show that

a limited prohibition or some other sanction would be more

appropriate, we consider that a full prohibition of the nature put

forward by the Authority will be apt.”

2.11. At paragraphs 32 and 33 of the Second Tribunal Decision, the Tribunal went on to

consider whether there were any such relevant factors. It also considered the

relevance of Mr Hobbs’s expressed intention not to return to the financial services

“32. In this case, as we have found, the conduct of Mr Hobbs was such

as to demonstrate a lack of integrity. In these proceedings Mr Hobbs

has had an opportunity to address the findings made by the Tribunal.

He has, however, failed to acknowledge any wrongdoing in relation to

his discredited story of the strategy of confusion, and the lies the

Tribunal found that he told in this respect both to the Authority and to

the Tribunal. We were told only by Mr Jaffey that Mr Hobbs continues

to disagree with certain of the Tribunal’s findings. We regard with

concern the failure by Mr Hobbs, even at such a remove from the

original decision of the Tribunal, to acknowledge his lack of integrity in

concocting the strategy of confusion story, and in persisting with it

during these proceedings. We agree with Mr Hunter that this gives rise

to a significant risk to the market were Mr Hobbs ever to seek to re-

enter it.

33. It is in that context that the expressed intention of Mr Hobbs not

to return to the financial services industry falls to be regarded.

Although Mr Hobbs may have no such present intention to return, his

intentions may change in the future, and it would be necessary at that

time to have in place an appropriate mechanism to enable the

Authority to assess whether to allow Mr Hobbs to play any role,

whether authorised or not, within the regulated industry. A full

prohibition order is such a mechanism, and is in our view, in the

circumstances of this case, both justified and proportionate. Should Mr

Hobbs desire to return to the industry in any capacity, it will be

possible for him to apply, under s 56(7) FSMA, for the prohibition

order to be varied or revoked.”

3.
DEFINITIONS

3.1.
The following definitions are used in this Final Notice:

“the Act” means the Financial Services and Markets Act 2000;

“the Authority” means the body corporate previously known as the Financial

Services Authority and renamed on 1 April 2013 as the Financial Conduct

Authority;

“the Decision Notice” means the decision notice dated 23 July 2010 given by the

Authority to Mr Hobbs in relation to this matter;

“the First Tribunal Decision” means the written decision of the Tribunal dated 22

November 2012 in relation to this matter;

“the Second Tribunal Decision” means the written decision of the Tribunal dated

13 December 2013 in relation to this matter; and

“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber).

4.
FACTS AND MATTERS

4.1.
The facts and matters relied upon are set out fully in the First and Second

Tribunal Decisions and are incorporated herein by reference.

5.
FAILINGS

5.1.
The Authority has the power, pursuant to section 56 of the Act, to prohibit an

individual from performing any function in relation to any regulated activity where

it appears to the Authority that that individual is not a fit and proper person.

5.2.
The regulatory provisions relevant to this Final Notice are set out more fully in

paragraphs 15 to 17 of the Second Tribunal Decision and are incorporated herein

by reference.

6.
IMPORTANT NOTICES

6.1.
This Final Notice is given under, and in accordance with, section 390 of the Act.

6.2.
Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of

information about the matter to which this notice relates. Under those

provisions, the Authority must publish such information about the matter to which

this notice relates as the Authority considers appropriate. The information may

be published in such manner as the Authority considers appropriate. However,

the Authority may not publish information if such publication would, in the opinion

of the Authority, be unfair to the person with respect to whom the action in this

notice was taken, be prejudicial to the interests of consumers or detrimental to

the stability of the UK financial system.

6.3.
The Authority intends to publish such information about the matter to which this

Final Notice relates as it considers appropriate.

Authority contacts

6.4.
For more information concerning this matter generally, contact Steven Clark

(direct line: 020 7066 2172) of the Authority’s Enforcement and Financial Crime

Division.

Financial Conduct Authority, Enforcement and Financial Crime Division