Final Notice
On , the Financial Conduct Authority issued a Final Notice to Martin Paul Cooke
FINAL NOTICE
1.
ACTION
1.1.
For the reasons given in this Final Notice, the Authority hereby:
(1)
imposes on Martin Paul Cooke a financial penalty of £6,020 pursuant to
section 66 of the Act; and
(2)
makes an order prohibiting Mr Cooke from performing any function in
relation to any regulated activities carried on by any authorised or exempt
persons, or exempt professional firm pursuant to section 56 of the Act.
1.2
Mr Cooke agreed to resolve this matter and qualified for a 30% (stage 1) discount
under the Authority’s executive settlement procedures. Mr Cooke also provided
verifiable evidence that payment of the full amount of the financial penalty would
cause him serious financial hardship. Were it not for Mr Cooke’s financial hardship,
and the settlement discount, the Authority would have imposed a financial penalty
of £61,020 consisting of £6,020 disgorgement, and £55,000 as a punitive penalty.
2.
SUMMARY OF REASONS
2.1
Mr Cooke was a designated member of MedDen Financial Services LLP (MedDen),
a limited liability partnership which was authorised and regulated by the Authority
from 22 January 2008 to 16 August 2024. MedDen provided financial advisory
services primarily to the medical and dental community, which included advice on
investments, pensions, insurance, mortgages and home finance.
2.2
During the Relevant Period, Mr Cooke was approved by the Authority to perform
the SMF27 (Partner) and SMF17 (Money Laundering Reporting Officer) senior
manager functions at MedDen under the Senior Managers Regime. Mr Cooke also
had responsibility for Insurance Distribution. During the Relevant Period, MedDen
had one other partner, Craig Buchan, who was approved to perform the SMF27
(Partner) and SMF16 (Compliance Oversight) senior manager functions. Mr Buchan
also had responsibility for Mortgage Credit Directive (MCD) Intermediation at
MedDen.
2.3
On 1 February 2021, MedDen entered into creditors’ voluntary liquidation. The
Financial Services Compensation Scheme (FSCS) subsequently declared MedDen
in default. As at 30 March 2023, the FSCS had upheld 35 claims against MedDen
and had paid out approximately £2.28 million on those claims.
Mr Cooke’s misconduct and the Individual Conduct Rules
2.4
On 14 December 2020, the Authority issued a First Supervisory Notice to MedDen
(the First Supervisory Notice). Under the First Supervisory Notice, the Authority,
exercising its own initiative powers, imposed on MedDen an asset requirement (the
2020 Asset Requirement) pursuant to section 55L of the Financial Services and
Markets Act 2000 (the Act).
2.5
Under the terms of the 2020 Asset Requirement, MedDen was not permitted,
without the prior written consent of the Authority, to in any way dispose of,
withdraw, transfer, deal with or diminish the value of its own assets. The 2020
Asset Requirement was imposed because the Authority was concerned that,
amongst other things, MedDen:
3
a) had two FOS awards made against it which it had not paid, and a number
of additional complaints against it which were under consideration by the
FOS;
b) had inadequate Professional Indemnity Insurance (PII) cover in respect of
some or all of its redress liabilities; and
c) was breaching its capital resources requirement by failing to hold sufficient
capital to meet liabilities excluded under its PII policy and FOS awards.
2.6
The Authority therefore considered that MedDen was failing, or likely to fail, to
satisfy the Appropriate Resources and Suitability Threshold Conditions (set out in
paragraphs 2D and 2E of Schedule 6 to the Act), and it was desirable to impose the
2020 Asset Requirement to secure an appropriate degree of protection for
consumers by preventing MedDen from disposing of or dissipating its assets which
could otherwise be used for the payment of redress to consumers.
2.7
On 15 and 21 December 2020, Mr Buchan transferred a total of £9,297 from
MedDen’s bank accounts across four separate transactions to accounts held by Mr
Buchan and Mr Cooke. These transfers were made without the Authority’s prior
written consent, in direct contravention of the 2020 Asset Requirement (the
Unauthorised Personal Transfers). A total of £4,650 was paid into a personal
bank account in Mr Cooke’s name. The Unauthorised Personal Transfers resulted in
MedDen’s bank accounts holding no funds as at 21 December 2020 for the benefit
of consumers.
2.8
In addition, Mr Cooke failed to properly engage with the Authority immediately prior
to issue of the First Supervisory Notice to MedDen and in relation to the Authority’s
enquiries after the First Supervisory Notice was issued. In particular, Mr Cooke
failed to engage adequately with the Authority in relation to the Authority’s
concerns in early December 2020, which resulted in the 2020 Asset Requirement
being imposed on MedDen, and then throughout the rest of December 2020 until
February 2021, in that he did not:
a) respond adequately to numerous information requests sent to him by the
Authority; and
b) failed to make himself available for a call with the Authority despite
numerous requests to do so.
2.9
Mr Cooke also failed to cooperate with the Authority throughout the course of the
investigation in relation to the Unauthorised Personal Transfers. In particular, Mr
a) refused to attend an interview with the Authority, despite being
compelled to do so;
b) did not respond adequately to numerous information requirements issued
to him during the investigation; and
c) provided inconsistent information to the Authority in response to
information requirements.
2.10
As part of his role at MedDen, Mr Cooke was required to comply with Individual
Conduct Rule 1, which provided that he must act with integrity. As a result of the
matters referred to in paragraphs 2.4 to 2.7 and set out more fully in this notice
below, the Authority considers that Mr Cooke acted with a lack of integrity in breach
2.11
The Authority has concluded that Mr Cooke recklessly received funds from one of
MedDen’s bank accounts to his own personal bank account. Mr Cooke was reckless
to the fact those transfers had been deliberately transferred from one of MedDen’s
accounts through Mr Buchan’s account log-in credentials to Mr Cooke’s personal
account, in breach of the terms of the 2020 Asset Requirement. These Unauthorised
Personal Transfers had been made and received in breach of the 2020 Asset
Requirement, Mr Cooke took no steps to return the funds, nor to alert the Authority
to the fact that the terms of the 2020 Asset Requirement had been breached.
2.12
The Unauthorised Personal Transfers resulted in the dissipation of assets which the
Authority had sought to safeguard by imposing the 2020 Asset Requirement on
MedDen (including for the benefit of consumers who were due redress for financial
losses suffered as a result of advice provided by MedDen) and therefore risked
causing further harm to consumers. Mr Cooke also obtained a direct financial
benefit by putting his own financial interests above those of consumers, who he
knew were due redress from MedDen. The Authority therefore considers that,
during the Relevant Period, Mr Cooke acted recklessly and with a lack of integrity
in breach of Individual Conduct Rule 1.
Sanction
2.13
Acting with integrity is a fundamental requirement upon any approved person,
including senior managers. Given the nature of the failings described in this notice,
the Authority considers that Mr Cooke is not a fit and proper person to perform any
function in relation to any regulated activity carried on by an authorised person,
exempt person or exempt professional firm.
2.14
The Authority hereby makes an order prohibiting Mr Cooke from performing any
function in relation to any regulated activity carried on by an authorised person,
exempt person or exempt professional firm pursuant to section 56 of the Act.
2.15
In addition, the Authority considers that the nature and seriousness of Mr Cooke’s
misconduct and breaches warrant the imposition of a significant financial penalty.
Mr Cooke provided verifiable evidence that the imposition of a financial penalty
would cause him serious financial hardship. Had it not been for his reduced financial
circumstances, the Authority would have imposed a financial penalty of £61,020 on
Mr Cooke pursuant to section 66 of the Act for his breach of Individual Conduct
Rule 1 during the Relevant Period (which includes a 30% discount as Mr Cooke
agreed to resolve the matter under the Authority’s executive settlement
procedures). Instead, the Authority hereby imposes a financial penalty of £6,020
on Mr Cooke.
3
DEFINITIONS
3.1
The definitions below are used in this Notice:
“the 2019 Asset Requirement” means the asset restriction contained within the
Voluntary Requirement imposed on MedDen by the Authority (by agreement)
under section 55L(5)(a) of the Act on 3 April 2019;
“the 2020 Asset Requirement” means the asset restriction contained within the
First Supervisory Notice imposed on MedDen on 14 December 2020;
“the Act” means the Financial Services and Markets Act 2000;
“the Authority” means the Financial Conduct Authority;
“Mr Buchan” means Craig Buchan;
“the Centaur Bond” means the Centaur Fixed Income Bond, a bond which was
issued by Centaur Group Finance Ltd and listed on the Bermuda Stock Exchange;
“Mr Cooke” means Martin Cooke;
“Code of Conduct” means the Code of Conduct (COCON), of the Handbook;
“DEPP” means the Authority’s Decision Procedure and Penalties Manual;
“EG” means the Authority’s Enforcement Guide;
“FIT” means the Fit and Proper test for Employees and Senior Personnel, part of
the Handbook;
“the FOS” means the Financial Ombudsman Service;
“the FSCS” means the Financial Services Compensation Scheme;
“the First Supervisory Notice” means First Supervisory Notice dated 14 December
2020;
“the Handbook” means the Authority’s Handbook of rules and guidance;
“MedDen” means MedDen Financial Services LLP;
“PII” means professional indemnity insurance;
“the Relevant Period” means from 15 December 2020 to 21 December 2020;
“the Threshold Conditions” means the threshold conditions set out in Schedule 6
to the Act;
“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber); and
7
“the Unauthorised Personal Transfers” means the sum of £9,297 which was
transferred out from one of MedDen’s bank accounts without the Authority’s prior
written consent, in direct contravention of the 2020 Asset Requirement, to
personal accounts held by Mr Buchan and Mr Cooke across four separate
transactions on 15 and 21 December 2020.
4
FACTS AND MATTERS
MedDen
4.1
MedDen is a limited liability partnership and has been authorised and regulated by
the Authority from 22 January 2008 to 16 August 2024.
4.2
On 1 February 2021, MedDen entered creditor’s voluntary liquidation. On 27 May
2021, the FSCS declared MedDen in default, which allowed consumers who had
been advised by MedDen and who believed they were owed compensation as a
result to make a claim to the FSCS.
4.3
Mr Cooke has worked in the financial services industry since 1999. He became an
LLP Designated Member of MedDen on 30 August 2007, together with Mr Buchan.
4.4
During the Relevant Period, Mr Cooke was approved by the Authority to perform
the SMF27 (Partner) and SMF 17 (Money Laundering Reporting Officer) senior
manager functions at MedDen. Mr Buchan was also approved by the Authority to
perform the SMF27 (Partner) and SMF 16 (Compliance Oversight) senior manager
functions at MedDen during the Relevant Period.
The Authority’s prior engagement with MedDen
MedDen’s entry into the 2019 Asset Requirement in 2019
4.5
The Authority visited MedDen in November 2018. After carrying out a review of
customer files, the Authority was concerned that there were significant issues with
MedDen’s advice process, resulting in unsuitable advice being provided by MedDen
to its customers regarding investments into the Centaur Bond.
4.6
Due to the Authority’s concerns, on 3 April 2019, MedDen applied to the Authority
on a voluntary basis for the imposition of an asset requirement pursuant to section
55L of the Act, namely the 2019 Asset Requirement. Under the 2019 Asset
Requirement, MedDen was required not to in any way dispose of, deal with, or
diminish the value of any assets (whether in the United Kingdom or elsewhere)
without the prior consent of the Authority, but was able to deal with or dispose of
assets in the ordinary and proper course of business.
4.7
In June 2020, the Authority agreed to lift the 2019 Asset Requirement because,
amongst other things, MedDen was seeking to address the concerns that had
resulted in the 2019 Asset Requirement being imposed through a sale of the
business. As a condition for agreeing to lift the 2019 Asset Requirement, the
Authority specifically requested that MedDen notify the Authority should one or
both of the following occur:
a) any consumer complaints made against MedDen relating to the Centaur
Bond were referred to the FOS; and/or
b) there was no prospect of MedDen being sold after a period of 3 months.
Imposition of the 2020 Asset Requirement on MedDen
4.8
In November 2020, the Authority became aware that the FOS had received
complaints from customers against MedDen relating to the Centaur Bond and that
MedDen had not notified the Authority about these complaints, despite this being
one of the conditions for the Authority lifting the 2019 Asset Requirement.
Additionally, MedDen had breached its capital resources requirement by failing to
hold sufficient capital to meet the excess payable on, and claims excluded by, its
PII policy and any FOS decisions made against it.
4.9
On 14 December 2020, the Authority issued a First Supervisory Notice to MedDen,
which imposed an asset requirement pursuant to section 55L of the Act on MedDen
(namely, the 2020 Asset Requirement). The First Supervisory Notice was issued
because the Authority had concerns about the FOS complaints which had been
made in respect of MedDen, its inadequate PII in respect of redress liabilities, and
its breach of its capital resources requirement. The Authority therefore considered
that MedDen was failing, or likely to fail, to satisfy the Threshold Conditions,
including the Appropriate Resources Threshold Condition and the Suitability
Threshold Condition
4.10
The 2020 Asset Requirement required that MedDen could not, without the prior
written consent of the Authority, in any way dispose of, withdraw, transfer, deal
with or diminish the value of any of its own assets.
Breach of the 2020 Asset Requirement
4.11
On 15 December 2020, Mr Cooke acknowledged receipt of the First Supervisory
Notice to the Authority via email, copying in Mr Buchan. Despite being aware of the
terms of the 2020 Asset Requirement, the following transfers were made without
the Authority’s prior written consent using Mr Buchan’s online banking credentials,
including two payments into Mr Cooke’s account (i.e. the Unauthorised Personal
a) On 15 December 2020 (the day after the 2020 Asset Requirement was
imposed), £3,500 was transferred from MedDen’s bank account to Mr
Buchan’s personal bank account;
b) On 15 December 2020, £3,500 was transferred from MedDen’s bank
account to Mr Cooke’s personal bank account;
c) On 21 December 2020, £1,150 was transferred from MedDen’s bank
account to Mr Cooke’s personal bank account; and
d) On 21 December 2020, £1,147.36 was transferred from MedDen’s Bank
account Mr Buchan’s personal bank account.
4.12
Mr Cooke knowingly accepted the funds received into his account by the
Unauthorised Personal Transfers on 15 and 20 December 2020 and acted
recklessly, including by not reporting these occurrences to the Authority. He has
also never returned any of these funds to MedDen and/or its liquidator. In
particular, Mr Cooke did not notify the Authority of the breaches at the point the
Authority emailed him, reminding him of his obligations under the 2020 Asset
Requirement and that funds could not been withdrawn without the Authority’s
written consent, a month later on 15 January 2021.
4.13
The Unauthorised Personal Transfers contravened the terms of the 2020 Asset
Requirement and resulted in a total of £9,297.36 being transferred for the direct
benefit of Mr Cooke and Mr Buchan. The Unauthorised Personal Transfers resulted
in none of MedDen’s accounts holding any funds as at 21 December 2020, with the
result that it had no funds available for the benefit of those of its customers who
were due redress.
Mr Cooke’s engagement with the Authority and degree of cooperation
4.14
Mr Cooke failed properly to engage with the Authority on a number of occasions.
a) around the time of the First Supervisory Notice was issued and the 2020
Asset Requirement was imposed on MedDen; and
b) after the Authority had commenced an investigation in relation to Mr
Buchan’s potential misconduct in relation to the Unauthorised Personal
Transfers.
Failure to engage with the Authority at the time of the First Supervisory Notice
4.15
Throughout December 2020 and January 2021, Mr Cooke:
a) failed to respond adequately or at all to a number of information
requirement requirements issued by the Authority, or provided inaccurate
information in response to the same;
b) failed to make himself available for calls with the Authority despite
numerous requests by the Authority for him to do so; and
c) Mr Cooke provided inconsistent explanations to the Authority at this time,
that he later contradicted on various occasions during the Authority’s
investigation, regarding the circumstances surrounding the Unauthorised
Personal Transfers from MedDen’s bank account in breach of the 2020
Asset Requirement.
Degree of cooperation with the Authority during the course of its investigation
4.16
Mr Cooke failed to cooperate with the Authority throughout the course of its
investigation into potential misconduct surrounding the Unauthorised Personal
Transfers. In particular, Mr Cooke:
a) failed to respond adequately to numerous information requirements issued
to him; and
b) refused to attend an interview with the Authority either in person or
remotely, despite being compelled to do so. Mr Cooke stated that he was
of the view that he had told the Authority everything it needed to know
and that he had nothing further to add.
5
FAILINGS
5.1
The regulatory provisions relevant to this Notice are referred to in Annex A.
5.2
As part of his role at MedDen, Mr Cooke was required to comply with Individual
Conduct Rule 1, which provided that he must act with integrity. By reason of the
facts and matters set out above, Mr Cooke breached Individual Conduct Rule 1 in
that he acted with a lack of integrity and recklessly.
5.3
In particular, Mr Cooke was reckless in knowingly receiving the funds from one of
MedDen’s accounts to his own personal account and as a result, was reckless as to
the fact that those transfers were in breach of the 2020 Asset Requirement. The
Unauthorised Personal Transfers received by Mr Cooke resulted in the dissipation
of assets which the Authority had sought to safeguard by imposing the 2020 Asset
Requirement on MedDen (including for the benefit of consumers who were due
redress for financial losses suffered as a result of advice provided by MedDen) and
therefore risked causing further harm to consumers. Mr Cooke also obtained a
direct financial benefit by putting his own financial interests above those of
consumers whom he knew were due redress from MedDen.
6
SANCTION
6.1
The Authority’s policy for imposing a financial penalty is set out in Chapter 6 of
DEPP. In respect of conduct occurring on or after 6 March 2010, the Authority
applies a five-step framework to determine the appropriate level of financial
penalty. DEPP 6.5B sets out the details of the five-step framework that applies in
respect of financial penalties imposed on individuals in non-market abuse cases.
6.2
Pursuant to DEPP 6.5B.1G, at Step 1, the Authority seeks to deprive an individual
of the financial benefit derived directly from the breach where it is practicable to
quantify this.
6.3
Mr Cooke derived a direct financial benefit from his breach of Individual Conduct
Rule 1. In particular, the Unauthorised Personal Transfers that were made in breach
of the 2020 Asset Requirement resulted in a total of £4,650 being paid directly to
a bank account in Mr Cooke’s name. The Authority therefore considers that Mr
Cooke derived a direct financial benefit of £4,650 from his breaches in respect of
the Unauthorised Personal Transfers made to him.
6.4
The Authority charges interest on these benefits at 8% per annum.
6.5
Step 1 is therefore £6,020 (inclusive of interest).
Step 2: Seriousness of the breach
6.6
Pursuant to DEPP 6.5B.2G, at Step 2 the Authority determines a figure that reflects
the seriousness of the breach. That figure is based on a percentage of the
individual’s relevant income. The individual’s relevant income is the gross amount
of all benefits received by the individual from the employment in connection with
which the breach occurred, and for the period of the breach. Where the breach
lasted less than 12 months, or was a one-off event, the relevant income will be
that earned by the individual in the 12 months preceding the end of the breach.
6.7
Mr Cooke’s breaches lasted less than 12 months. Accordingly, Mr Cooke’s relevant
income for the purpose of Step 2 is that which he received during the period 22
December 2019 to 21 December 2020. The Authority considers Mr Cooke’s relevant
income for this period to be £67,212.97.
6.8
In deciding on the percentage of the relevant income that forms the basis of the
Step 2 figure, the Authority considers the seriousness of the breach and chooses a
percentage between 0% and 40%. This range is divided into five fixed levels which
represent, on a sliding scale, the seriousness of the breach; the more serious the
breach, the higher the level. For penalties imposed on individuals in non-market
abuse cases there are the following five levels:
Level 1 – 0%
Level 2 – 10%
Level 3 – 20%
Level 4 – 30%
Level 5 – 40%
6.9
In assessing the seriousness level, the Authority takes into account various factors
which reflect the impact and nature of the breach, and whether it was committed
deliberately or recklessly. Of these, the Authority considers the following factors to
be relevant.
Impact of the breach
6.10
Although the benefit Mr Cooke gained from the breach was modest in value, these
gains were at the expense of MedDen’s customers who had been given poor advice
by MedDen and were owed redress in respect of that advice (DEPP 6.5B.2G(8)(a)
and (c)).
Nature of the breach
6.11
Mr Cooke’s breach involved the contravention of the terms of the 2020 Asset
Requirement which had been imposed by the Authority (DEPP 6.5B.2G(9)(a)).
6.12
Mr Cooke failed to act with integrity during the Relevant Period in that he (a) was
reckless in knowingly receiving money from MedDen’s bank account on two
separate occasions and, as a result (b) was reckless as to the fact that those
transfers were in breach of the 2020 Asset Requirement (DEPP 6.5B.2G(9)(e)).
6.13
Mr Cooke was also an experienced industry professional, having worked in
financial services since 1999 (DEPP 6.5B.2G(9)(j)).
6.14
In addition, the breaches were committed whilst Mr Cooke held a senior position at
MedDen, namely the SMF27 (Partner) and SMF17 (Money Laundering Reporting
Officer) senior manager functions (DEPP 6.5B.2G(9)(k)).
Whether the breach was deliberate and/or reckless
6.15
The Authority considers that Mr Cooke knowingly committed the breaches, in
particular as he had given assurances to the Authority that neither of the MedDen
partners would be moving or disposing any of the MedDen assets. He received
these funds to his personal account despite these assurances (obtaining a direct
financial benefit from doing so) and therefore he was reckless as to whether doing
so contravened the 2020 Asset Requirement (DEPP 6.5B.2(10)(a) and (b),
(11)(a)).
Level of seriousness
6.16
DEPP 6.5B.2G(12) lists factors likely to be considered ‘level 4 or 5 factors’. Of these
the Authority considers the following factors to be relevant:
a) Mr Cooke failed to act with integrity (DEPP 6.5B.2G(12)(d)); and
b) Mr Cooke committed the breach recklessly (DEPP 6.5B.2G(12)(g)).
6.17
DEPP 6.5B.2G(13) lists factors likely to be considered ‘level 1, 2 or 3 factors’. The
Authority considers that none of these apply.
6.18
Taking all of these factors into account, the Authority considers the seriousness of
Mr Cooke’s breach to be level 4 and so the Step 2 figure is 30% of £67,212.97.
6.19
Step 2 is therefore £20,163.
Step 3: Mitigating and aggravating factors
6.20
Pursuant to DEPP 6.5B.3G, at Step 3 the Authority may increase or decrease the
amount of the financial penalty arrived at after Step 2, but not including any
amount disgorged at Step 1, to take into account factors which aggravate or
mitigate the breach.
6.21
The Authority considers that the following factors aggravate the breach:
a) Mr Cooke failed to bring the fact of the breaches in respect of the
Unauthorised Personal Transfers promptly to the Authority’s attention,
including on being explicitly reminded of his obligations under the 2020
Asset Requirement by the Authority in January 2021 (DEPP6.5B.3(2)(a));
b) Mr Cooke provided inconsistent and contradictory information to the
Authority in relation to his reasons for breaching the 2020 Asset
Requirement. Mr Cooke initially informed the Authority that he had not
understood the scope of the 2020 Asset Requirement. However, he later
stated that the MedDen liquidator had advised that withdrawals of funds
were
permitted
when
no
such
advice
had
been
provided
(DEPP6.5B.3G(2)(b));
c) Mr Cooke has taken no remedial steps since his breaches in respect of the
Unauthorised Personal Transfers. He has not returned the funds which he
received in knowledge of the 2020 Asset Requirement and has retained
the improper personal benefit obtained (DEPP 6.5B.3G(2)(d));
d) despite Mr Cooke having informed the Authority that he and Mr Buchan
would not move or dispose of any of MedDen assets, he proceeded to
receive the benefit on two separate occasions through the Unauthorised
Personal Transfers, in breach of the terms of the 2020 Asset Requirement
(DEPP 6.5B.3G(2)(g));
e) as set out in paragraph 4.15, Mr Cooke failed to engage with the Authority
around the time of the First Supervisory Notice (including the 2020 Asset
Requirement) was issued by:
i.
failing to respond to information requirements; and
ii.
failing to attend calls with the Authority (DEPP6.5B.3(2)(i)); and
f) as set out in paragraph 4.16, Mr Cooke failed to cooperate with the
Authority’s investigation by:
i.
failing to respond adequately to information requirements; and
ii.
refusing to attend an interview (DEPP6.5B3(2)(i).
The Authority considers that there are no factors that mitigate the breach.
6.22
Having taken into account the aggravating factors, the Authority considers that the
Step 2 figure should be increased by 30%.
6.23
Step 3 is therefore £26,211.
Step 4: Adjustment for deterrence
6.24
Pursuant to DEPP 6.5B.4G, if the Authority considers that the figure arrived at after
Step 3 is insufficient to deter the individual who committed the breach, or others,
from committing further or similar breaches, then the Authority may increase the
penalty.
6.25
The Authority considers that the Step 3 figure is unlikely to represent a sufficient
deterrent to Mr Cooke and to others. The Authority has therefore decided to apply
an uplift to the financial penalty to achieve credible deterrence. The Authority
considers this to be appropriate given that the absolute value of the penalty is too
small in relation to the seriousness, nature and impact of the breach to meet the
Authority’s objective of credible deterrence.
6.26
Taking the above into account, the Authority considers it appropriate to increase
the Step 3 figure by a multiple of 3.
6.27
Step 4 is therefore £78,633.
Step 5: Settlement discount
6.28
Pursuant to DEPP 6.5B.5G, if the Authority and the individual on whom a penalty
is to be imposed agree the amount of the financial penalty and other terms, DEPP
6.7 provides that the amount of the financial penalty which might otherwise have
been payable will be reduced to reflect the stage at which the Authority and the
individual reached agreement. The settlement discount does not apply to the
disgorgement of any benefits calculated at Step 1.
6.29
The Authority and Mr Cooke reached agreement at Stage 1 and so a 30% discount
applies to the Step 4 figure.
6.30
Step 5 is therefore £55,000 (rounded down to the nearest £100).
Serious financial hardship
6.31
Pursuant to DEPP 6.5D.1G, the Authority will consider reducing the amount of a
penalty if an individual produces verifiable evidence that payment of the penalty
would cause them serious financial hardship.
6.32
Mr Cooke has provided verifiable evidence that a financial penalty of £61,020 (i.e.
the total of the Step 1 figure of £6,020 and the Step 5 figure of £55,000) would
cause him serious financial hardship. The Authority therefore considers it
appropriate to take Mr Cooke’s financial position into account, and reduce the Step
5 figure to £0 for serious financial hardship, but does not consider it appropriate to
allow Mr Cooke to retain the financial benefit he derived directly from his breach
(DEPP 6.5D.2G(7)(a)). Therefore, the Authority does not consider it appropriate to
reduce the Step 1 figure of £6,020.
6.33
The Authority therefore hereby imposes a total financial penalty of £6,020 on Mr
Cooke for breaching Individual Conduct Rule 1.
6.34
The Authority has the power to prohibit individuals under section 56 of the Act. The
Authority’s approach to exercising these powers is set out at Chapter 9 of the
Enforcement Guide.
6.35
In considering whether to impose a prohibition order, the Authority has had regard
to all relevant circumstances of the case. In particular, the Authority has considered
Mr Cooke’s fitness and propriety with regard to his integrity.
6.36
The Authority considers that Mr Cooke acted without integrity and was reckless in
knowingly receiving funds from one of MedDen’s bank accounts, and as a result
was reckless as to the fact that those transfers were in breach of the 2020 Asset
Requirement. Mr Cooke also personally benefitted from his reckless misconduct.
The breach of the 2020 Asset Requirement through the Unauthorised Personal
Transfers resulted in the dissipation of assets which the Authority had sought to
safeguard (including for the benefit of consumers who were due redress for
financial losses suffered). However, Mr Cooke put his own financial interests above
those of consumers whom he knew were due redress from MedDen. Where a senior
manager fails to act with integrity and in a way that risks causing harm to
consumers, there is a substantial risk of harm to the Authority’s integrity and
consumer protection objectives, as such conduct undermines confidence in the
financial system and puts customers at risk.
6.37
Given the nature of the failings described in this Notice, the Authority considers
that Mr Cooke is not a fit and proper person to perform any function in relation to
any regulated activity carried on by an authorised or exempt person or exempt
professional firm. The Authority has decided that, to advance its integrity and
consumer protection objectives, and given the risk posed to those objectives, it is
appropriate and proportionate in all the circumstances to prohibit Mr Cooke from
performing any such function.
7
PROCEDURAL MATTERS
7.1
This Notice is given to Mr Cooke under and in accordance with section 390 of the
Act. The following statutory rights are important.
Decision maker
7.2
The decision which gave rise to the obligation to give this Notice was made by the
Settlement Decision Makers.
Manner and time for payment
7.3
The financial penalty must be paid in three monthly instalments of £50 to the
Authority for three months, followed by equal monthly instalments of £177.90 for
33 months starting with the first payment of £50on 1 December 2024, and the final
payment on or before 1 December 2027.
If the financial penalty is not paid
7.4
If all or any of the financial penalty is outstanding on 1 December 2027, the
Authority may recover the outstanding amount as a debt owed by Mr Cooke and
due immediately to the Authority.
7.5
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 you or prejudicial to the interests of consumers or
detrimental to the stability of the UK financial system.
7.6
The Authority intends to publish such information about the matter to which this
Final Notice relates as it considers appropriate.
Authority contacts
7.7
For more information concerning this matter generally, contact Katie Jones at the
Authority (direct line: 020 7066 9720 / email: katie.jones@fca.org.uk).
Financial Conduct Authority, Enforcement and Market Oversight Division
ANNEX A
1.
RELEVANT STATUORY PROVISIONS
1.1.
The Authority’s objectives are set out in Part 1A of the Act, and include the
operational objective of securing an appropriate degree of protection for consumers
(section 1C of the Act).
1.2.
Section 56 of the Act provides that the Authority may make an order prohibiting an
individual from performing a specified function, any function falling within a
specified description or any function, if it appears to the Authority that that
individual is not a fit and proper person to perform functions in relation to a
regulated activity carried on by an authorised person, exempt person or a person
to whom, as a result of Part 20, the general prohibition does not apply in relation
to that activity. Such an order may relate to a specified regulated activity, any
regulated activity falling within a specified description, or all regulated activities.
1.3.
Section 66 of the Act provides that the Authority may take action against a person
if it appears to the Authority that he is guilty of misconduct and the Authority is
satisfied that it is appropriate in all the circumstances to take action against him.
A person is guilty of misconduct if, while an approved person, he has failed to
comply with rules of conduct made by the Authority under section 64A of the Act,
or has been knowingly concerned in a contravention by a relevant authorised
person of a relevant requirement imposed on that authorised person.
2.
RELEVANT REGULATORY PROVISIONS
2.1.
In exercising its power to make a prohibition order, the Authority must have regard
to guidance published in the Handbook and in regulatory guides, such as EG. The
main relevant considerations in relation to the action specified above are set out
below
2.2.
The Authority’s Code of Conduct (COCON) has been issued under section 64A of
the Act.
2.3.
COCON applies to the persons set out in COCON 1.1.2R. This includes an SMF
Manager (which includes a designated senior management function as defined in
the Handbook) of an Authority-authorised firm from 9 December 2019 onwards.
2.4.
Individual Conduct Rule 1 (COCON 2.2.1R) states that you must act with integrity.
The Fit and Proper Test for Employees and Senior Personnel
2.5.
The part of the Handbook entitled “The Fit and Proper test for Employees and Senior
Personnel” (FIT) sets out the criteria that the Authority will consider when assessing
the fitness and propriety of a candidate for a controlled function, including a
designated senior management function, and may consider when assessing the
continuing fitness and propriety of an approved person.
2.6.
FIT 1.3.1G states that the Authority will have regard to a number of factors when
assessing the fitness and propriety of a person. The most important considerations
will be the person’s honesty, integrity and reputation, competence and capability
and financial soundness (FIT 1.3.1BG).
The Enforcement Guide
2.7.
The Enforcement Guide (EG) sets out the Authority’s approach to exercising its
main enforcement powers under the Act.
2.8.
Chapter 7 of EG sets out the Authority’s approach to exercising its power to impose
a financial a penalty.
The Authority’s policy for exercising its power to make a prohibition order
2.9.
The Authority’s policy in relation to prohibition orders is set out in Chapter 9 of EG.
2.10. EG 9.1.1 states that the Authority may exercise the power to prohibit individuals
who are not fit and proper from carrying out functions in relation to regulated
activities where it considers that, to achieve any of its statutory objectives, it is
appropriate either to prevent an individual from performing any functions in relation
to regulated activities or to restrict the functions which he may perform.
2.11.
EG 9.2 sets out the Authority’s general policy on making prohibition orders. In
particular—
(a) EG 9.2.1 states that the Authority will consider all relevant circumstances,
including whether enforcement action should be taken or has been taken
already against the individual by the Authority or other enforcement agencies;
(b) EG 9.2.2 states that the Authority has the power to make a range of prohibition
orders depending on the circumstances of each case and the range of regulated
activities to which the individual’s lack of fitness and propriety is relevant; and
(c) EG 9.2.3 states the scope of a prohibition order will depend on the range of
functions which the individual concerned performs in relation to regulated
activities, the reasons why he is not fit and proper and the severity of risk
which he poses to consumers or the market generally.
2.12. EG 9.3.2 states that, when the Authority decides to make a prohibition order
against an approved person and/or withdraw their approval, the Authority will
consider all the relevant circumstances of the case. These may include, but are not
limited to:
(a) whether the individual is fit and proper to perform functions in relation to
regulated activities (noting the criteria set out in FIT 2.1, 2.2, and 2.3);
(b) the relevance and materiality of any matters indicating unfitness;
(c) the length of time since the occurrence of any matters indicating unfitness;
and
(d) the severity of the risk which the individual poses to consumers and to
confidence in the financial system.
DEPP
2.13. Chapter 6 of DEPP sets out the Authority’s statement of policy with respect to the
imposition and amount of financial penalties under the Act. In particular the steps
to be followed for the imposition of penalties on individuals in non-market abuse
cases are set out at Chapter 6.5B of DEPP.
1.
ACTION
1.1.
For the reasons given in this Final Notice, the Authority hereby:
(1)
imposes on Martin Paul Cooke a financial penalty of £6,020 pursuant to
section 66 of the Act; and
(2)
makes an order prohibiting Mr Cooke from performing any function in
relation to any regulated activities carried on by any authorised or exempt
persons, or exempt professional firm pursuant to section 56 of the Act.
1.2
Mr Cooke agreed to resolve this matter and qualified for a 30% (stage 1) discount
under the Authority’s executive settlement procedures. Mr Cooke also provided
verifiable evidence that payment of the full amount of the financial penalty would
cause him serious financial hardship. Were it not for Mr Cooke’s financial hardship,
and the settlement discount, the Authority would have imposed a financial penalty
of £61,020 consisting of £6,020 disgorgement, and £55,000 as a punitive penalty.
2.
SUMMARY OF REASONS
2.1
Mr Cooke was a designated member of MedDen Financial Services LLP (MedDen),
a limited liability partnership which was authorised and regulated by the Authority
from 22 January 2008 to 16 August 2024. MedDen provided financial advisory
services primarily to the medical and dental community, which included advice on
investments, pensions, insurance, mortgages and home finance.
2.2
During the Relevant Period, Mr Cooke was approved by the Authority to perform
the SMF27 (Partner) and SMF17 (Money Laundering Reporting Officer) senior
manager functions at MedDen under the Senior Managers Regime. Mr Cooke also
had responsibility for Insurance Distribution. During the Relevant Period, MedDen
had one other partner, Craig Buchan, who was approved to perform the SMF27
(Partner) and SMF16 (Compliance Oversight) senior manager functions. Mr Buchan
also had responsibility for Mortgage Credit Directive (MCD) Intermediation at
MedDen.
2.3
On 1 February 2021, MedDen entered into creditors’ voluntary liquidation. The
Financial Services Compensation Scheme (FSCS) subsequently declared MedDen
in default. As at 30 March 2023, the FSCS had upheld 35 claims against MedDen
and had paid out approximately £2.28 million on those claims.
Mr Cooke’s misconduct and the Individual Conduct Rules
2.4
On 14 December 2020, the Authority issued a First Supervisory Notice to MedDen
(the First Supervisory Notice). Under the First Supervisory Notice, the Authority,
exercising its own initiative powers, imposed on MedDen an asset requirement (the
2020 Asset Requirement) pursuant to section 55L of the Financial Services and
Markets Act 2000 (the Act).
2.5
Under the terms of the 2020 Asset Requirement, MedDen was not permitted,
without the prior written consent of the Authority, to in any way dispose of,
withdraw, transfer, deal with or diminish the value of its own assets. The 2020
Asset Requirement was imposed because the Authority was concerned that,
amongst other things, MedDen:
3
a) had two FOS awards made against it which it had not paid, and a number
of additional complaints against it which were under consideration by the
FOS;
b) had inadequate Professional Indemnity Insurance (PII) cover in respect of
some or all of its redress liabilities; and
c) was breaching its capital resources requirement by failing to hold sufficient
capital to meet liabilities excluded under its PII policy and FOS awards.
2.6
The Authority therefore considered that MedDen was failing, or likely to fail, to
satisfy the Appropriate Resources and Suitability Threshold Conditions (set out in
paragraphs 2D and 2E of Schedule 6 to the Act), and it was desirable to impose the
2020 Asset Requirement to secure an appropriate degree of protection for
consumers by preventing MedDen from disposing of or dissipating its assets which
could otherwise be used for the payment of redress to consumers.
2.7
On 15 and 21 December 2020, Mr Buchan transferred a total of £9,297 from
MedDen’s bank accounts across four separate transactions to accounts held by Mr
Buchan and Mr Cooke. These transfers were made without the Authority’s prior
written consent, in direct contravention of the 2020 Asset Requirement (the
Unauthorised Personal Transfers). A total of £4,650 was paid into a personal
bank account in Mr Cooke’s name. The Unauthorised Personal Transfers resulted in
MedDen’s bank accounts holding no funds as at 21 December 2020 for the benefit
of consumers.
2.8
In addition, Mr Cooke failed to properly engage with the Authority immediately prior
to issue of the First Supervisory Notice to MedDen and in relation to the Authority’s
enquiries after the First Supervisory Notice was issued. In particular, Mr Cooke
failed to engage adequately with the Authority in relation to the Authority’s
concerns in early December 2020, which resulted in the 2020 Asset Requirement
being imposed on MedDen, and then throughout the rest of December 2020 until
February 2021, in that he did not:
a) respond adequately to numerous information requests sent to him by the
Authority; and
b) failed to make himself available for a call with the Authority despite
numerous requests to do so.
2.9
Mr Cooke also failed to cooperate with the Authority throughout the course of the
investigation in relation to the Unauthorised Personal Transfers. In particular, Mr
a) refused to attend an interview with the Authority, despite being
compelled to do so;
b) did not respond adequately to numerous information requirements issued
to him during the investigation; and
c) provided inconsistent information to the Authority in response to
information requirements.
2.10
As part of his role at MedDen, Mr Cooke was required to comply with Individual
Conduct Rule 1, which provided that he must act with integrity. As a result of the
matters referred to in paragraphs 2.4 to 2.7 and set out more fully in this notice
below, the Authority considers that Mr Cooke acted with a lack of integrity in breach
2.11
The Authority has concluded that Mr Cooke recklessly received funds from one of
MedDen’s bank accounts to his own personal bank account. Mr Cooke was reckless
to the fact those transfers had been deliberately transferred from one of MedDen’s
accounts through Mr Buchan’s account log-in credentials to Mr Cooke’s personal
account, in breach of the terms of the 2020 Asset Requirement. These Unauthorised
Personal Transfers had been made and received in breach of the 2020 Asset
Requirement, Mr Cooke took no steps to return the funds, nor to alert the Authority
to the fact that the terms of the 2020 Asset Requirement had been breached.
2.12
The Unauthorised Personal Transfers resulted in the dissipation of assets which the
Authority had sought to safeguard by imposing the 2020 Asset Requirement on
MedDen (including for the benefit of consumers who were due redress for financial
losses suffered as a result of advice provided by MedDen) and therefore risked
causing further harm to consumers. Mr Cooke also obtained a direct financial
benefit by putting his own financial interests above those of consumers, who he
knew were due redress from MedDen. The Authority therefore considers that,
during the Relevant Period, Mr Cooke acted recklessly and with a lack of integrity
in breach of Individual Conduct Rule 1.
Sanction
2.13
Acting with integrity is a fundamental requirement upon any approved person,
including senior managers. Given the nature of the failings described in this notice,
the Authority considers that Mr Cooke is not a fit and proper person to perform any
function in relation to any regulated activity carried on by an authorised person,
exempt person or exempt professional firm.
2.14
The Authority hereby makes an order prohibiting Mr Cooke from performing any
function in relation to any regulated activity carried on by an authorised person,
exempt person or exempt professional firm pursuant to section 56 of the Act.
2.15
In addition, the Authority considers that the nature and seriousness of Mr Cooke’s
misconduct and breaches warrant the imposition of a significant financial penalty.
Mr Cooke provided verifiable evidence that the imposition of a financial penalty
would cause him serious financial hardship. Had it not been for his reduced financial
circumstances, the Authority would have imposed a financial penalty of £61,020 on
Mr Cooke pursuant to section 66 of the Act for his breach of Individual Conduct
Rule 1 during the Relevant Period (which includes a 30% discount as Mr Cooke
agreed to resolve the matter under the Authority’s executive settlement
procedures). Instead, the Authority hereby imposes a financial penalty of £6,020
on Mr Cooke.
3
DEFINITIONS
3.1
The definitions below are used in this Notice:
“the 2019 Asset Requirement” means the asset restriction contained within the
Voluntary Requirement imposed on MedDen by the Authority (by agreement)
under section 55L(5)(a) of the Act on 3 April 2019;
“the 2020 Asset Requirement” means the asset restriction contained within the
First Supervisory Notice imposed on MedDen on 14 December 2020;
“the Act” means the Financial Services and Markets Act 2000;
“the Authority” means the Financial Conduct Authority;
“Mr Buchan” means Craig Buchan;
“the Centaur Bond” means the Centaur Fixed Income Bond, a bond which was
issued by Centaur Group Finance Ltd and listed on the Bermuda Stock Exchange;
“Mr Cooke” means Martin Cooke;
“Code of Conduct” means the Code of Conduct (COCON), of the Handbook;
“DEPP” means the Authority’s Decision Procedure and Penalties Manual;
“EG” means the Authority’s Enforcement Guide;
“FIT” means the Fit and Proper test for Employees and Senior Personnel, part of
the Handbook;
“the FOS” means the Financial Ombudsman Service;
“the FSCS” means the Financial Services Compensation Scheme;
“the First Supervisory Notice” means First Supervisory Notice dated 14 December
2020;
“the Handbook” means the Authority’s Handbook of rules and guidance;
“MedDen” means MedDen Financial Services LLP;
“PII” means professional indemnity insurance;
“the Relevant Period” means from 15 December 2020 to 21 December 2020;
“the Threshold Conditions” means the threshold conditions set out in Schedule 6
to the Act;
“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber); and
7
“the Unauthorised Personal Transfers” means the sum of £9,297 which was
transferred out from one of MedDen’s bank accounts without the Authority’s prior
written consent, in direct contravention of the 2020 Asset Requirement, to
personal accounts held by Mr Buchan and Mr Cooke across four separate
transactions on 15 and 21 December 2020.
4
FACTS AND MATTERS
MedDen
4.1
MedDen is a limited liability partnership and has been authorised and regulated by
the Authority from 22 January 2008 to 16 August 2024.
4.2
On 1 February 2021, MedDen entered creditor’s voluntary liquidation. On 27 May
2021, the FSCS declared MedDen in default, which allowed consumers who had
been advised by MedDen and who believed they were owed compensation as a
result to make a claim to the FSCS.
4.3
Mr Cooke has worked in the financial services industry since 1999. He became an
LLP Designated Member of MedDen on 30 August 2007, together with Mr Buchan.
4.4
During the Relevant Period, Mr Cooke was approved by the Authority to perform
the SMF27 (Partner) and SMF 17 (Money Laundering Reporting Officer) senior
manager functions at MedDen. Mr Buchan was also approved by the Authority to
perform the SMF27 (Partner) and SMF 16 (Compliance Oversight) senior manager
functions at MedDen during the Relevant Period.
The Authority’s prior engagement with MedDen
MedDen’s entry into the 2019 Asset Requirement in 2019
4.5
The Authority visited MedDen in November 2018. After carrying out a review of
customer files, the Authority was concerned that there were significant issues with
MedDen’s advice process, resulting in unsuitable advice being provided by MedDen
to its customers regarding investments into the Centaur Bond.
4.6
Due to the Authority’s concerns, on 3 April 2019, MedDen applied to the Authority
on a voluntary basis for the imposition of an asset requirement pursuant to section
55L of the Act, namely the 2019 Asset Requirement. Under the 2019 Asset
Requirement, MedDen was required not to in any way dispose of, deal with, or
diminish the value of any assets (whether in the United Kingdom or elsewhere)
without the prior consent of the Authority, but was able to deal with or dispose of
assets in the ordinary and proper course of business.
4.7
In June 2020, the Authority agreed to lift the 2019 Asset Requirement because,
amongst other things, MedDen was seeking to address the concerns that had
resulted in the 2019 Asset Requirement being imposed through a sale of the
business. As a condition for agreeing to lift the 2019 Asset Requirement, the
Authority specifically requested that MedDen notify the Authority should one or
both of the following occur:
a) any consumer complaints made against MedDen relating to the Centaur
Bond were referred to the FOS; and/or
b) there was no prospect of MedDen being sold after a period of 3 months.
Imposition of the 2020 Asset Requirement on MedDen
4.8
In November 2020, the Authority became aware that the FOS had received
complaints from customers against MedDen relating to the Centaur Bond and that
MedDen had not notified the Authority about these complaints, despite this being
one of the conditions for the Authority lifting the 2019 Asset Requirement.
Additionally, MedDen had breached its capital resources requirement by failing to
hold sufficient capital to meet the excess payable on, and claims excluded by, its
PII policy and any FOS decisions made against it.
4.9
On 14 December 2020, the Authority issued a First Supervisory Notice to MedDen,
which imposed an asset requirement pursuant to section 55L of the Act on MedDen
(namely, the 2020 Asset Requirement). The First Supervisory Notice was issued
because the Authority had concerns about the FOS complaints which had been
made in respect of MedDen, its inadequate PII in respect of redress liabilities, and
its breach of its capital resources requirement. The Authority therefore considered
that MedDen was failing, or likely to fail, to satisfy the Threshold Conditions,
including the Appropriate Resources Threshold Condition and the Suitability
Threshold Condition
4.10
The 2020 Asset Requirement required that MedDen could not, without the prior
written consent of the Authority, in any way dispose of, withdraw, transfer, deal
with or diminish the value of any of its own assets.
Breach of the 2020 Asset Requirement
4.11
On 15 December 2020, Mr Cooke acknowledged receipt of the First Supervisory
Notice to the Authority via email, copying in Mr Buchan. Despite being aware of the
terms of the 2020 Asset Requirement, the following transfers were made without
the Authority’s prior written consent using Mr Buchan’s online banking credentials,
including two payments into Mr Cooke’s account (i.e. the Unauthorised Personal
a) On 15 December 2020 (the day after the 2020 Asset Requirement was
imposed), £3,500 was transferred from MedDen’s bank account to Mr
Buchan’s personal bank account;
b) On 15 December 2020, £3,500 was transferred from MedDen’s bank
account to Mr Cooke’s personal bank account;
c) On 21 December 2020, £1,150 was transferred from MedDen’s bank
account to Mr Cooke’s personal bank account; and
d) On 21 December 2020, £1,147.36 was transferred from MedDen’s Bank
account Mr Buchan’s personal bank account.
4.12
Mr Cooke knowingly accepted the funds received into his account by the
Unauthorised Personal Transfers on 15 and 20 December 2020 and acted
recklessly, including by not reporting these occurrences to the Authority. He has
also never returned any of these funds to MedDen and/or its liquidator. In
particular, Mr Cooke did not notify the Authority of the breaches at the point the
Authority emailed him, reminding him of his obligations under the 2020 Asset
Requirement and that funds could not been withdrawn without the Authority’s
written consent, a month later on 15 January 2021.
4.13
The Unauthorised Personal Transfers contravened the terms of the 2020 Asset
Requirement and resulted in a total of £9,297.36 being transferred for the direct
benefit of Mr Cooke and Mr Buchan. The Unauthorised Personal Transfers resulted
in none of MedDen’s accounts holding any funds as at 21 December 2020, with the
result that it had no funds available for the benefit of those of its customers who
were due redress.
Mr Cooke’s engagement with the Authority and degree of cooperation
4.14
Mr Cooke failed properly to engage with the Authority on a number of occasions.
a) around the time of the First Supervisory Notice was issued and the 2020
Asset Requirement was imposed on MedDen; and
b) after the Authority had commenced an investigation in relation to Mr
Buchan’s potential misconduct in relation to the Unauthorised Personal
Transfers.
Failure to engage with the Authority at the time of the First Supervisory Notice
4.15
Throughout December 2020 and January 2021, Mr Cooke:
a) failed to respond adequately or at all to a number of information
requirement requirements issued by the Authority, or provided inaccurate
information in response to the same;
b) failed to make himself available for calls with the Authority despite
numerous requests by the Authority for him to do so; and
c) Mr Cooke provided inconsistent explanations to the Authority at this time,
that he later contradicted on various occasions during the Authority’s
investigation, regarding the circumstances surrounding the Unauthorised
Personal Transfers from MedDen’s bank account in breach of the 2020
Asset Requirement.
Degree of cooperation with the Authority during the course of its investigation
4.16
Mr Cooke failed to cooperate with the Authority throughout the course of its
investigation into potential misconduct surrounding the Unauthorised Personal
Transfers. In particular, Mr Cooke:
a) failed to respond adequately to numerous information requirements issued
to him; and
b) refused to attend an interview with the Authority either in person or
remotely, despite being compelled to do so. Mr Cooke stated that he was
of the view that he had told the Authority everything it needed to know
and that he had nothing further to add.
5
FAILINGS
5.1
The regulatory provisions relevant to this Notice are referred to in Annex A.
5.2
As part of his role at MedDen, Mr Cooke was required to comply with Individual
Conduct Rule 1, which provided that he must act with integrity. By reason of the
facts and matters set out above, Mr Cooke breached Individual Conduct Rule 1 in
that he acted with a lack of integrity and recklessly.
5.3
In particular, Mr Cooke was reckless in knowingly receiving the funds from one of
MedDen’s accounts to his own personal account and as a result, was reckless as to
the fact that those transfers were in breach of the 2020 Asset Requirement. The
Unauthorised Personal Transfers received by Mr Cooke resulted in the dissipation
of assets which the Authority had sought to safeguard by imposing the 2020 Asset
Requirement on MedDen (including for the benefit of consumers who were due
redress for financial losses suffered as a result of advice provided by MedDen) and
therefore risked causing further harm to consumers. Mr Cooke also obtained a
direct financial benefit by putting his own financial interests above those of
consumers whom he knew were due redress from MedDen.
6
SANCTION
6.1
The Authority’s policy for imposing a financial penalty is set out in Chapter 6 of
DEPP. In respect of conduct occurring on or after 6 March 2010, the Authority
applies a five-step framework to determine the appropriate level of financial
penalty. DEPP 6.5B sets out the details of the five-step framework that applies in
respect of financial penalties imposed on individuals in non-market abuse cases.
6.2
Pursuant to DEPP 6.5B.1G, at Step 1, the Authority seeks to deprive an individual
of the financial benefit derived directly from the breach where it is practicable to
quantify this.
6.3
Mr Cooke derived a direct financial benefit from his breach of Individual Conduct
Rule 1. In particular, the Unauthorised Personal Transfers that were made in breach
of the 2020 Asset Requirement resulted in a total of £4,650 being paid directly to
a bank account in Mr Cooke’s name. The Authority therefore considers that Mr
Cooke derived a direct financial benefit of £4,650 from his breaches in respect of
the Unauthorised Personal Transfers made to him.
6.4
The Authority charges interest on these benefits at 8% per annum.
6.5
Step 1 is therefore £6,020 (inclusive of interest).
Step 2: Seriousness of the breach
6.6
Pursuant to DEPP 6.5B.2G, at Step 2 the Authority determines a figure that reflects
the seriousness of the breach. That figure is based on a percentage of the
individual’s relevant income. The individual’s relevant income is the gross amount
of all benefits received by the individual from the employment in connection with
which the breach occurred, and for the period of the breach. Where the breach
lasted less than 12 months, or was a one-off event, the relevant income will be
that earned by the individual in the 12 months preceding the end of the breach.
6.7
Mr Cooke’s breaches lasted less than 12 months. Accordingly, Mr Cooke’s relevant
income for the purpose of Step 2 is that which he received during the period 22
December 2019 to 21 December 2020. The Authority considers Mr Cooke’s relevant
income for this period to be £67,212.97.
6.8
In deciding on the percentage of the relevant income that forms the basis of the
Step 2 figure, the Authority considers the seriousness of the breach and chooses a
percentage between 0% and 40%. This range is divided into five fixed levels which
represent, on a sliding scale, the seriousness of the breach; the more serious the
breach, the higher the level. For penalties imposed on individuals in non-market
abuse cases there are the following five levels:
Level 1 – 0%
Level 2 – 10%
Level 3 – 20%
Level 4 – 30%
Level 5 – 40%
6.9
In assessing the seriousness level, the Authority takes into account various factors
which reflect the impact and nature of the breach, and whether it was committed
deliberately or recklessly. Of these, the Authority considers the following factors to
be relevant.
Impact of the breach
6.10
Although the benefit Mr Cooke gained from the breach was modest in value, these
gains were at the expense of MedDen’s customers who had been given poor advice
by MedDen and were owed redress in respect of that advice (DEPP 6.5B.2G(8)(a)
and (c)).
Nature of the breach
6.11
Mr Cooke’s breach involved the contravention of the terms of the 2020 Asset
Requirement which had been imposed by the Authority (DEPP 6.5B.2G(9)(a)).
6.12
Mr Cooke failed to act with integrity during the Relevant Period in that he (a) was
reckless in knowingly receiving money from MedDen’s bank account on two
separate occasions and, as a result (b) was reckless as to the fact that those
transfers were in breach of the 2020 Asset Requirement (DEPP 6.5B.2G(9)(e)).
6.13
Mr Cooke was also an experienced industry professional, having worked in
financial services since 1999 (DEPP 6.5B.2G(9)(j)).
6.14
In addition, the breaches were committed whilst Mr Cooke held a senior position at
MedDen, namely the SMF27 (Partner) and SMF17 (Money Laundering Reporting
Officer) senior manager functions (DEPP 6.5B.2G(9)(k)).
Whether the breach was deliberate and/or reckless
6.15
The Authority considers that Mr Cooke knowingly committed the breaches, in
particular as he had given assurances to the Authority that neither of the MedDen
partners would be moving or disposing any of the MedDen assets. He received
these funds to his personal account despite these assurances (obtaining a direct
financial benefit from doing so) and therefore he was reckless as to whether doing
so contravened the 2020 Asset Requirement (DEPP 6.5B.2(10)(a) and (b),
(11)(a)).
Level of seriousness
6.16
DEPP 6.5B.2G(12) lists factors likely to be considered ‘level 4 or 5 factors’. Of these
the Authority considers the following factors to be relevant:
a) Mr Cooke failed to act with integrity (DEPP 6.5B.2G(12)(d)); and
b) Mr Cooke committed the breach recklessly (DEPP 6.5B.2G(12)(g)).
6.17
DEPP 6.5B.2G(13) lists factors likely to be considered ‘level 1, 2 or 3 factors’. The
Authority considers that none of these apply.
6.18
Taking all of these factors into account, the Authority considers the seriousness of
Mr Cooke’s breach to be level 4 and so the Step 2 figure is 30% of £67,212.97.
6.19
Step 2 is therefore £20,163.
Step 3: Mitigating and aggravating factors
6.20
Pursuant to DEPP 6.5B.3G, at Step 3 the Authority may increase or decrease the
amount of the financial penalty arrived at after Step 2, but not including any
amount disgorged at Step 1, to take into account factors which aggravate or
mitigate the breach.
6.21
The Authority considers that the following factors aggravate the breach:
a) Mr Cooke failed to bring the fact of the breaches in respect of the
Unauthorised Personal Transfers promptly to the Authority’s attention,
including on being explicitly reminded of his obligations under the 2020
Asset Requirement by the Authority in January 2021 (DEPP6.5B.3(2)(a));
b) Mr Cooke provided inconsistent and contradictory information to the
Authority in relation to his reasons for breaching the 2020 Asset
Requirement. Mr Cooke initially informed the Authority that he had not
understood the scope of the 2020 Asset Requirement. However, he later
stated that the MedDen liquidator had advised that withdrawals of funds
were
permitted
when
no
such
advice
had
been
provided
(DEPP6.5B.3G(2)(b));
c) Mr Cooke has taken no remedial steps since his breaches in respect of the
Unauthorised Personal Transfers. He has not returned the funds which he
received in knowledge of the 2020 Asset Requirement and has retained
the improper personal benefit obtained (DEPP 6.5B.3G(2)(d));
d) despite Mr Cooke having informed the Authority that he and Mr Buchan
would not move or dispose of any of MedDen assets, he proceeded to
receive the benefit on two separate occasions through the Unauthorised
Personal Transfers, in breach of the terms of the 2020 Asset Requirement
(DEPP 6.5B.3G(2)(g));
e) as set out in paragraph 4.15, Mr Cooke failed to engage with the Authority
around the time of the First Supervisory Notice (including the 2020 Asset
Requirement) was issued by:
i.
failing to respond to information requirements; and
ii.
failing to attend calls with the Authority (DEPP6.5B.3(2)(i)); and
f) as set out in paragraph 4.16, Mr Cooke failed to cooperate with the
Authority’s investigation by:
i.
failing to respond adequately to information requirements; and
ii.
refusing to attend an interview (DEPP6.5B3(2)(i).
The Authority considers that there are no factors that mitigate the breach.
6.22
Having taken into account the aggravating factors, the Authority considers that the
Step 2 figure should be increased by 30%.
6.23
Step 3 is therefore £26,211.
Step 4: Adjustment for deterrence
6.24
Pursuant to DEPP 6.5B.4G, if the Authority considers that the figure arrived at after
Step 3 is insufficient to deter the individual who committed the breach, or others,
from committing further or similar breaches, then the Authority may increase the
penalty.
6.25
The Authority considers that the Step 3 figure is unlikely to represent a sufficient
deterrent to Mr Cooke and to others. The Authority has therefore decided to apply
an uplift to the financial penalty to achieve credible deterrence. The Authority
considers this to be appropriate given that the absolute value of the penalty is too
small in relation to the seriousness, nature and impact of the breach to meet the
Authority’s objective of credible deterrence.
6.26
Taking the above into account, the Authority considers it appropriate to increase
the Step 3 figure by a multiple of 3.
6.27
Step 4 is therefore £78,633.
Step 5: Settlement discount
6.28
Pursuant to DEPP 6.5B.5G, if the Authority and the individual on whom a penalty
is to be imposed agree the amount of the financial penalty and other terms, DEPP
6.7 provides that the amount of the financial penalty which might otherwise have
been payable will be reduced to reflect the stage at which the Authority and the
individual reached agreement. The settlement discount does not apply to the
disgorgement of any benefits calculated at Step 1.
6.29
The Authority and Mr Cooke reached agreement at Stage 1 and so a 30% discount
applies to the Step 4 figure.
6.30
Step 5 is therefore £55,000 (rounded down to the nearest £100).
Serious financial hardship
6.31
Pursuant to DEPP 6.5D.1G, the Authority will consider reducing the amount of a
penalty if an individual produces verifiable evidence that payment of the penalty
would cause them serious financial hardship.
6.32
Mr Cooke has provided verifiable evidence that a financial penalty of £61,020 (i.e.
the total of the Step 1 figure of £6,020 and the Step 5 figure of £55,000) would
cause him serious financial hardship. The Authority therefore considers it
appropriate to take Mr Cooke’s financial position into account, and reduce the Step
5 figure to £0 for serious financial hardship, but does not consider it appropriate to
allow Mr Cooke to retain the financial benefit he derived directly from his breach
(DEPP 6.5D.2G(7)(a)). Therefore, the Authority does not consider it appropriate to
reduce the Step 1 figure of £6,020.
6.33
The Authority therefore hereby imposes a total financial penalty of £6,020 on Mr
Cooke for breaching Individual Conduct Rule 1.
6.34
The Authority has the power to prohibit individuals under section 56 of the Act. The
Authority’s approach to exercising these powers is set out at Chapter 9 of the
Enforcement Guide.
6.35
In considering whether to impose a prohibition order, the Authority has had regard
to all relevant circumstances of the case. In particular, the Authority has considered
Mr Cooke’s fitness and propriety with regard to his integrity.
6.36
The Authority considers that Mr Cooke acted without integrity and was reckless in
knowingly receiving funds from one of MedDen’s bank accounts, and as a result
was reckless as to the fact that those transfers were in breach of the 2020 Asset
Requirement. Mr Cooke also personally benefitted from his reckless misconduct.
The breach of the 2020 Asset Requirement through the Unauthorised Personal
Transfers resulted in the dissipation of assets which the Authority had sought to
safeguard (including for the benefit of consumers who were due redress for
financial losses suffered). However, Mr Cooke put his own financial interests above
those of consumers whom he knew were due redress from MedDen. Where a senior
manager fails to act with integrity and in a way that risks causing harm to
consumers, there is a substantial risk of harm to the Authority’s integrity and
consumer protection objectives, as such conduct undermines confidence in the
financial system and puts customers at risk.
6.37
Given the nature of the failings described in this Notice, the Authority considers
that Mr Cooke is not a fit and proper person to perform any function in relation to
any regulated activity carried on by an authorised or exempt person or exempt
professional firm. The Authority has decided that, to advance its integrity and
consumer protection objectives, and given the risk posed to those objectives, it is
appropriate and proportionate in all the circumstances to prohibit Mr Cooke from
performing any such function.
7
PROCEDURAL MATTERS
7.1
This Notice is given to Mr Cooke under and in accordance with section 390 of the
Act. The following statutory rights are important.
Decision maker
7.2
The decision which gave rise to the obligation to give this Notice was made by the
Settlement Decision Makers.
Manner and time for payment
7.3
The financial penalty must be paid in three monthly instalments of £50 to the
Authority for three months, followed by equal monthly instalments of £177.90 for
33 months starting with the first payment of £50on 1 December 2024, and the final
payment on or before 1 December 2027.
If the financial penalty is not paid
7.4
If all or any of the financial penalty is outstanding on 1 December 2027, the
Authority may recover the outstanding amount as a debt owed by Mr Cooke and
due immediately to the Authority.
7.5
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 you or prejudicial to the interests of consumers or
detrimental to the stability of the UK financial system.
7.6
The Authority intends to publish such information about the matter to which this
Final Notice relates as it considers appropriate.
Authority contacts
7.7
For more information concerning this matter generally, contact Katie Jones at the
Authority (direct line: 020 7066 9720 / email: katie.jones@fca.org.uk).
Financial Conduct Authority, Enforcement and Market Oversight Division
ANNEX A
1.
RELEVANT STATUORY PROVISIONS
1.1.
The Authority’s objectives are set out in Part 1A of the Act, and include the
operational objective of securing an appropriate degree of protection for consumers
(section 1C of the Act).
1.2.
Section 56 of the Act provides that the Authority may make an order prohibiting an
individual from performing a specified function, any function falling within a
specified description or any function, if it appears to the Authority that that
individual is not a fit and proper person to perform functions in relation to a
regulated activity carried on by an authorised person, exempt person or a person
to whom, as a result of Part 20, the general prohibition does not apply in relation
to that activity. Such an order may relate to a specified regulated activity, any
regulated activity falling within a specified description, or all regulated activities.
1.3.
Section 66 of the Act provides that the Authority may take action against a person
if it appears to the Authority that he is guilty of misconduct and the Authority is
satisfied that it is appropriate in all the circumstances to take action against him.
A person is guilty of misconduct if, while an approved person, he has failed to
comply with rules of conduct made by the Authority under section 64A of the Act,
or has been knowingly concerned in a contravention by a relevant authorised
person of a relevant requirement imposed on that authorised person.
2.
RELEVANT REGULATORY PROVISIONS
2.1.
In exercising its power to make a prohibition order, the Authority must have regard
to guidance published in the Handbook and in regulatory guides, such as EG. The
main relevant considerations in relation to the action specified above are set out
below
2.2.
The Authority’s Code of Conduct (COCON) has been issued under section 64A of
the Act.
2.3.
COCON applies to the persons set out in COCON 1.1.2R. This includes an SMF
Manager (which includes a designated senior management function as defined in
the Handbook) of an Authority-authorised firm from 9 December 2019 onwards.
2.4.
Individual Conduct Rule 1 (COCON 2.2.1R) states that you must act with integrity.
The Fit and Proper Test for Employees and Senior Personnel
2.5.
The part of the Handbook entitled “The Fit and Proper test for Employees and Senior
Personnel” (FIT) sets out the criteria that the Authority will consider when assessing
the fitness and propriety of a candidate for a controlled function, including a
designated senior management function, and may consider when assessing the
continuing fitness and propriety of an approved person.
2.6.
FIT 1.3.1G states that the Authority will have regard to a number of factors when
assessing the fitness and propriety of a person. The most important considerations
will be the person’s honesty, integrity and reputation, competence and capability
and financial soundness (FIT 1.3.1BG).
The Enforcement Guide
2.7.
The Enforcement Guide (EG) sets out the Authority’s approach to exercising its
main enforcement powers under the Act.
2.8.
Chapter 7 of EG sets out the Authority’s approach to exercising its power to impose
a financial a penalty.
The Authority’s policy for exercising its power to make a prohibition order
2.9.
The Authority’s policy in relation to prohibition orders is set out in Chapter 9 of EG.
2.10. EG 9.1.1 states that the Authority may exercise the power to prohibit individuals
who are not fit and proper from carrying out functions in relation to regulated
activities where it considers that, to achieve any of its statutory objectives, it is
appropriate either to prevent an individual from performing any functions in relation
to regulated activities or to restrict the functions which he may perform.
2.11.
EG 9.2 sets out the Authority’s general policy on making prohibition orders. In
particular—
(a) EG 9.2.1 states that the Authority will consider all relevant circumstances,
including whether enforcement action should be taken or has been taken
already against the individual by the Authority or other enforcement agencies;
(b) EG 9.2.2 states that the Authority has the power to make a range of prohibition
orders depending on the circumstances of each case and the range of regulated
activities to which the individual’s lack of fitness and propriety is relevant; and
(c) EG 9.2.3 states the scope of a prohibition order will depend on the range of
functions which the individual concerned performs in relation to regulated
activities, the reasons why he is not fit and proper and the severity of risk
which he poses to consumers or the market generally.
2.12. EG 9.3.2 states that, when the Authority decides to make a prohibition order
against an approved person and/or withdraw their approval, the Authority will
consider all the relevant circumstances of the case. These may include, but are not
limited to:
(a) whether the individual is fit and proper to perform functions in relation to
regulated activities (noting the criteria set out in FIT 2.1, 2.2, and 2.3);
(b) the relevance and materiality of any matters indicating unfitness;
(c) the length of time since the occurrence of any matters indicating unfitness;
and
(d) the severity of the risk which the individual poses to consumers and to
confidence in the financial system.
DEPP
2.13. Chapter 6 of DEPP sets out the Authority’s statement of policy with respect to the
imposition and amount of financial penalties under the Act. In particular the steps
to be followed for the imposition of penalties on individuals in non-market abuse
cases are set out at Chapter 6.5B of DEPP.