FINAL NOTICE

TAKE NOTICE: The Financial Services Authority of 25 The North Colonnade,
Canary Wharf, London, E14 5HS ("the FSA") has decided to take the following
action

1.
ACTION

1.1. By an application received on 21 December 2009 ("the Application"),
Elmswood.EU Ltd ("Elmswood.EU") applied under section 60 of the Financial
Services and Markets Act 2000 ("the Act") for approval of David J Sime
(“Mr Sime”) to perform the controlled functions of director (CF1), compliance
oversight (CF10), money laundering reporting (CF11) and customer (CF30).

1.2. The Application was completed by the provision of further information on 10 June
2010.

1.3. For the reasons listed below the FSA has refused the Application and, in the light of
the Upper Tribunal’s (“the Tribunal”) dismissal of the reference to it as referred to
below, has issued this Final Notice.

2.
REASONS FOR THE ACTION

2.1. By its Warning Notice dated 8 July 2010 (“the Warning Notice”), the FSA gave
Elmswood EU notice that it proposed to refuse the Application. Elmswood EU and
Mr Sime were given the opportunity to make representations to the FSA about that
proposed action.

2.2. By its Decision Notice dated 8 December 2010 (“the Decision Notice”), the FSA
gave each of Elmswood EU and Mr Sime notice that it had decided to refuse the
Application.

2.3. On 30 December 2010, Mr Sime acting on behalf of Elmswood EU, referred the
Decision Notice to the Tribunal. The Tribunal, in a written decision dated
10 January 2012 (which can be found on the Tribunal’s website at
http://www.tribunals.gov.uk/financeandtax/Documents/decisions/sime_v_fsa_decis
ion.pdf) (the “Decision”) found that the FSA had been correct to refuse Elmswood
EU’s Application and dismissed the reference. Accordingly the FSA has refused the
Application and issued this Final Notice.

2.4. On the basis of the facts and matters set out in the Tribunal’s Decision and for the
reasons set out therein, the FSA has concluded that it cannot be satisfied that
Mr Sime is a fit and proper person to perform the controlled functions to which the
Application relates.

2.5. The Tribunal’s Decision sets out fully the Tribunal’s (and thus the FSA’s) reasons
for refusing the Application and should therefore be read in full. By way of
summary, the Authority notes the following particular paragraphs of the Decision
(with references to FIM and RAM being references to certain of Mr Sime’s former
employers and references to Bailey, Witkin and Coan to former clients of
Mr Sime’s previous employers):

“OUR ASSESSMENT OF MR SIME

94. Mr Sime’s disclosure to the Authority was not what it ought to have
been. He did not treat the FIM application with sufficient
seriousness, and signed a false declaration. After the difficulties and
delays encountered with the FIM application, he should have
understood (1) the importance of satisfying himself fully as to the
accuracy and completeness of an application for approval, and (2)
that the FSA wished to make its own judgment about allegations
which Mr Sime regarded as unfounded. He failed or was unwilling to
learn from this experience.

95. He was careless or reckless in filling in his December 2009
application. He failed to mention the theft allegation and police
interview; while the FSA knew of them, his failure to mention them

rendered his declaration untrue and indicated an uncooperative
attitude to the FSA’s requirements. He made a misjudgement in not
taking the opportunity to disclose the Bailey matter in order to
demonstrate an open attitude to the regulator. He failed to provide
clarity regarding the circumstances in which he left RAM and failed
to disclose that the relationship had ended in an unsatisfactory
fashion, with allegations of misconduct being made on both sides.

96. His combative and evasive reactions to the various allegations made
against him showed an impatient inability to control his temper, a
degree of aggression which was unnecessary and inappropriate in a
professional context, and a readiness to make extravagant
accusations against others without a sufficient basis for doing so.
Because of his lack of patience, it appears to have been beyond his
ability to rebut allegations by dealing with them directly,
systematically, and comprehensively. He was unable to deal calmly
and professionally with situations that made him angry.

97. We found him arrogant. He adopted an unrealistic position that fault
was always 100% with someone else. In his oral opening he
described himself to us as “a cut above the rest”. This claim was not
borne out by (for example) his defective applications for approval,
the way he dealt with the Witkin and Coan commissions, or the way
he managed his departure from RAM. We were also concerned by
his attitude to record-keeping, and instances of his lack of close
attention to detail.

98. Because of the nature of the issues and the contentions put forward
by the FSA our factual findings have been concentrated upon the
negatives. These need to be balanced by the positives. We gained the
impression that Mr Sime was hard working, was ordinarily good to
his employees or colleagues, and normally acted with honesty and
integrity. It was when he was under pressure and insufficiently
supported that he let himself down.

99. In our judgment the Authority was correct not to regard him as fit
and proper for the controlled functions for which he applied for
approval in December 2009, given the context in which it was
proposed that he would work. The Authority was also correct to
refuse the application by Elmswood, on the basis of insufficient
human resources, because Elmswood would be wholly dependent
upon Mr Sime.

100. We wish to make clear that this conclusion is not a decision that
Mr Sime is not fit and proper for work in the financial services
industry. In a well-controlled environment with proper support and
supervision he could again be successful, as he was when he worked

3

for insurance companies. What he is not suitable for is an
environment where he works without effective supervision and
support. Our decision is unanimous.”

2.6. In relation to certain of the non-disclosures, the Tribunal held that, whilst the FSA
had been informed previously of these matters (ie prior to and outside of the
Application), Mr Sime ought to have brought them to the FSA’s specific attention
in the Form A. For example, at paragraph 64 the Tribunal stated that:

“We acknowledge that the FSA already had details of the theft allegation
and of the police interview. Mr Sime knew this, and cannot have intended
positively to conceal these matters from the FSA in December 2009. But
he was either careless in filling in the form or perhaps hoped (even if
unconsciously) that the matters might be overlooked if he did not draw
attention to them again. By failing to mention them in the December 2009
application Mr Sime was guilty of making a false declaration that the
application form information was accurate and complete, and he did not
demonstrate the open and cooperative attitude to the regulator which he
should have done.”

2.7. The Tribunal also found that, if Mr Sime “had adopted an open attitude with the
FSA, as he ought to have done, he would have disclosed to the Authority” that, for
example, his relationship with a former employer “had ended in an unsatisfactory
fashion, with allegations of misconduct being made on both sides” (paragraph 89 of
the Decision).

Relevant statutory provisions

2.8. The FSA may grant an application for approval under section 60 of the Act only if
it is satisfied that the person in respect of whom the application is made is a fit and
proper person to perform the controlled function to which the application relates
(section 61(1) of the Act).

Relevant Handbook provisions

2.9. The Fit and Proper test for Approved Persons ("FIT") sets out the criteria that the
FSA will consider when assessing the fitness and propriety of a person to perform a
particular controlled function. The most important considerations include the
person’s honesty, integrity and reputation (FIT 1.3.1G).

2.10. In assessing fitness, the FSA will take account of the activities of the firm for which
the controlled function is to be performed, the permission held by that firm and the
markets within which it operates (FIT 1.3.2G).

2.11. If a matter comes to the FSA’s attention which suggests that the person might not
be fit and proper, the FSA will take into account how relevant and how important
that matter is (FIT 1.3.4G).

2.12. In determining a person’s honesty, integrity and reputation, the matters to which the
FSA will have regard include:

(1)
whether the person has been the subject of any adverse finding or any
settlement in civil proceedings, particularly in connection with investment or
other financial business, misconduct, fraud or the formation or management
of a body corporate FIT 2.1.3G(2);

(2)
whether the person has been the subject of, or interviewed in the course of,
any existing or previous investigation or disciplinary proceedings, by the
FSA, by other regulatory authorities (including a previous regulator), clearing
houses and exchanges, professional bodies, or government bodies or agencies
FIT 2.1.3G(3);

(3)
whether the person is or has been the subject of any proceedings of a
disciplinary or criminal nature, or has been notified of any potential
proceedings or of any investigation which might lead to those proceedings
FIT 2.1.3G(4);

(4)
whether the person has contravened any of the requirements and standards of
the regulatory system or the equivalent standards or requirements of other
regulatory authorities (including a previous regulator), clearing houses and
exchanges, professional bodies, or government bodies or agencies
FIT 2.1.3G(5);

(5)
whether, as a result of the removal of the relevant licence, registration or other
authority, the person has been refused the right to carry on a trade, business or
profession requiring a licence, registration or other authority FIT 2.1.3G(8);

(6)
whether the person has been dismissed, or asked to resign and resigned, from
employment or from a position of trust, fiduciary appointment or similar FIT
2.1.3G(11);

(7)
whether, in the past, the person has been candid and truthful in all his dealings
with any regulatory body and whether the person demonstrates a readiness
and willingness to comply with the requirements and standards of the
regulatory system and with other legal, regulatory and professional
requirements and standards FIT 2.1.3G(13).

Facts and matters relied on

2.13. The facts and matters relied on are set out more fully in the Tribunal’s Decision and
are incorporated herein by reference.

3.
CONCLUSION

3.1. On the basis of the facts and matters described above, the FSA is not satisfied that
Mr Sime is a fit and proper person to perform the controlled functions to which the
Application relates.

4.
IMPORTANT NOTICES

4.1. This Final Notice is given to you pursuant to Section 390(2) of the Act

4.2. Sections 391(4), 391(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 the
Final 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 you or prejudicial to the interests of consumers.

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

4.4. For more information concerning this matter generally, you should contact Gillian
Lavabre, Manager, Permissions Department at the FSA (direct line: 020 7066 4582
/ e-mail: gillian.lavabre@fsa.gov.uk).