Cum-Ex: if the Court stays your action against one firm for misconduct, just enforce against another for systems and controls failures instead

FCA Enforcement has 14 ongoing Cum-Ex investigations into firms and 8 into individuals - 3.8% of its total caseload (FCA FOI responses, 24 Feb 2021).  They've had little publicity until recently, when the High Court and FCA fired shots across one another's bows.

The High Court was first, in February 2021 staying RDC proceedings pending the outcome of civil proceedings in the Commercial Court brought by the Danish Customs and Tax Administration, Skatteforvaltningen (SKAT).  In issue in those proceedings were questions whether the relevant trading breached Danish tax law and the Danish-US double taxation treaty.  (The Commercial Court later dismissed the proceedings, characterising them as an attempt to enforce Danish law in UK courts - but SKAT is seeking to appeal.)  The High Court saw these questions of law as more within the Commercial Court's expertise than that of the RDC, such that not staying the RDC proceedings might risk "serious prejudice".  In any event, it noted the extended duration of the relevant FCA Enforcement investigation to date, and asked the question: what's the rush now?  

This may well have put a spanner in the works of various of FCA Enforcement's Cum-Ex investigations.  But not all.  Not to be dissuaded, the FCA returned fire with a final notice issued to Sapien Capital, a UK-based corporate finance advisory and brokerage firm.  This final notice is remarkable in its avoidance of the Danish law issues.  Instead, it proceeds on the basis of a finding that the trading patterns engaged in by the firm's clients themselves were "highly suggestive of sophisticated financial crime" and that the firm had inadequate systems and controls to address this risk.

How and when might the other FCA Enforcement Cum-Ex investigations be concluded?  We'll have to wait (for the Court of Appeal) and see.  In the meantime: well played, FCA.  Well played.