FINAL NOTICE

To:

Pacific Continental Securities (UK) Limited (In Liquidation)

Address:

C/o Henry Anthony Shinners and Anthony Cliff Spicer


Smith and Williamson


25 Moorgate


London


EC2R 6AY

FCA
Reference
Number:

197332


ACTION

1.
For the reasons set out in this Final Notice, the Authority hereby takes the
following action against PCS.

2.
The Authority gave PCS the Decision Notice which notified PCS that for the
reasons given below and pursuant to section 55J of the Act, the Authority had
decided to cancel PCS’s Part 4A permission.

3.
PCS has not referred the matter to the Tribunal within 28 days of the date on
which the Decision Notice was given to it.

4.
Accordingly, the Authority has today cancelled PCS’s Part 4A permission.

DEFINITIONS

5.
The definitions below are used in this Final Notice:

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


Pacific Continental Securities (UK) Limited (In Liquidation)
15 March 2016
Final Notice

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“the Authority” means the body corporate previously known as the Financial
Services Authority and renamed on 1 April 2013 as the Financial Conduct
Authority;



“COND” means the guidance on the threshold conditions section of the Handbook;

“the Decision Notice” means the Decision Notice given to PCS on 11 February
2016;

“EG” means the Enforcement Guide;

“the Handbook” means the Authority’s Handbook of rules and guidance;

“IPRU-INV” means the Interim Prudential Sourcebook for Investment Businesses
section of the Handbook;

“PCS” means Pacific Continental Securities (UK) Limited) (In Liquidation);

“PCS’s Part 4A permission” means the permission granted to PCS under Part 4A
of the Act;

“the Principles” means the Authority’s Principles for Businesses;

“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

“the Warning Notice” means the Warning Notice given to PCS on 15 January
2016.

RELEVANT STATUTORY AND REGULATORY PROVISIONS

6.
The statutory and regulatory provisions relevant to this Final Notice are set out in
the Annex.

SUMMARY OF REASONS

7.
On the basis of the facts and matters and conclusions described in the Warning
Notice, and in the Decision Notice, it appears to the Authority that PCS is failing
to satisfy the Threshold Conditions, in that the Authority is not satisfied that
PCS’s resources are appropriate in relation to the regulated activities it has
permission to carry on. Specifically, PCS is unable to meet its liabilities as they
have fallen due and is in liquidation.

FACTS AND MATTERS RELIED ON

8.
PCS became authorised by the Authority on 1 December 2001 to conduct
designated investment business.

9.
With effect from 15 June 2007, a requirement was added to PCS’s Part 4A
permission that PCS may not undertake any regulated activity except to the
extent necessary to close and settle existing client positions.

Pacific Continental Securities (UK) Limited (In Liquidation)
15 March 2016
Final Notice

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10.
PCS must comply with IPRU-INV 2.2.1R, which requires PCS to ensure that it is
able to meet its liabilities as they fall due. PCS must also comply with Principle 4
(Financial Prudence) of the Authority’s Principles for Businesses, which requires
PCS to maintain adequate financial resources.

11.
On 20 June 2007, PCS went into administration.

12.
On 24 August 2007, PCS filed at Companies House a Statement of Affairs as at 20
August 2007, which stated that the estimated total deficiency to creditors was
£1,087,454.

13.
On 14 March 2008, PCS moved from administration to creditors’ voluntary
liquidation.

14.
PCS’s liquidators have been asked by the Authority to apply to cancel PCS’s Part
4A permission, but they have declined to do so.

FAILINGS

15.
From the facts and matters described above, the Authority, having regard to its
operational objectives, has reached the following conclusions:

•
being unable to meet its liabilities as they have fallen due, PCS is failing to
comply with the Authority Rule IPRU-INV 2.2.1R, and PCS is failing to meet
the requirements of Principle 4 (Financial Prudence) of the Principles; and

•
PCS is also failing to satisfy the Threshold Conditions in that, in the opinion of
the Authority, PCS’s resources are not appropriate in relation to the regulated
activities in PCS’s Part 4A permission. Therefore, PCS is failing to satisfy the
appropriate resources Threshold Condition set out in paragraph 2D of
Schedule 6 to the Act.

DECISION MAKER

16.
The decision which gave rise to the obligation to give this Final Notice was made
by the Regulatory Decisions Committee.

IMPORTANT

17.
This Final Notice is given to PCS in accordance with section 390(1) of the Act.

18.
The Authority must publish such information about the matter to which this Final
Notice relates as the Authority considers appropriate. The information may be
published in such a 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 PCS or prejudicial to the interests of consumers.

19.
The Authority intends to publish such information about the matter to which this
Final Notice relates as it considers appropriate.

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20.
For more information concerning this matter generally, PCS should contact Adam
Doe at the Authority (direct line: 020 7066 5522).

John Kirby
Enforcement and Market Oversight Division



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ANNEX

RELEVANT STATUTORY PROVISIONS

1.
The Authority’s operational objectives established in section 1(B) of the Act
include protecting and enhancing the integrity of the UK financial system and
securing an appropriate degree of consumer protection.

2.
The Authority is authorised by section 55J of the Act to cancel an authorised
person’s Part 4A permission, where it appears to the Authority that it is failing to
satisfy the Threshold Conditions.

3.
Paragraph 2D of Part 1B of Schedule 6 to the Act states that:

“The resources of A must be appropriate in relation to the regulated
activities that A carries on or seeks to carry on.”

RELEVANT HANDBOOK PROVISIONS

4.
In exercising its power to cancel a firm’s Part 4A permission, the Authority must
have regard to guidance published in the Handbook. The relevant main
considerations in relation to the action specified above are set out below.

5.
Principle 4 (Financial Prudence) of the Authority’s Principles for Businesses
requires that a firm must maintain adequate financial resources.

6.
Rule IPRU-INV 2.2.1R requires that:

“A firm must be able to meet its liabilities as they fall due.”

Guidance concerning the relevant Threshold Condition

7.
Guidance on the Threshold Conditions is set out in COND, the relevant provisions
of which are summarised below.

COND 2.4 – Appropriate Resources (paragraph 2D of Part 1B of Schedule 6 to the Act)

8.
COND 2.4.1AUK(1) reproduces the relevant statutory provision that the resources
of A must be appropriate in relation to the regulated activities that A carries on or
seeks to carry on.

9.
COND 2.4.1BG provides that paragraph 2D of Schedule 6 to the Act sets out the
appropriate resources threshold condition for firms carrying on, or seeking to
carry on, regulated activities which do not include a PRA-regulated activity.

10.
COND 2.4.4G(2) states that relevant matters to which the Authority may have
regard when assessing whether a firm will satisfy, and continue to satisfy the
appropriate resources threshold condition include whether there are any
indications that the firm will not be able to meet its debts as they fall due and
whether the firm has entered into liquidation.

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OTHER RELEVANT REGULATORY PROVISIONS

11.
The Authority’s policy in relation to exercising its powers is set out in EG, the
relevant provisions of which are summarised below.

12.
EG 8.1(1) provides that the Authority may use its own initiative power to vary or
cancel the permission of an authorised person under section 55J of the Act, where
the person is failing or is likely to fail to satisfy the threshold conditions for which
the Authority is responsible.

Cancelling a firm’s Part 4A permission on the Authority’s own initiative

13.
EG 8.13(1) states that the Authority will consider cancelling a firm’s Part 4A
permission using its own initiative power contained in section 55J of the Act in
circumstances where the Authority has very serious concerns about the firm, or
the way its business is or has been conducted.

14.
EG 8.14 provides examples of the circumstances in which the Authority will
consider cancelling a Part 4A permission, and EG 8.14(3) specifies that the failure
to maintain adequate financial resources is one such circumstance.