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In response to Ed Brewer's question about the potential for double recovery by a securities regulator and a private individual affected by illegal securities dealings, the British Parliament has enacted a new Financial Services and Markets Act 2000, s 382 of which seems to cover this situation (the act is not yet in force). As I read this section, the Secretary of State or Financial Services Authority is obliged to turn over money recovered from infringers to 'qualifying persons', suggesting that the problem outlined by Ed Brewer may not arise. The section follows. We may note that the term 'Restitution Order' is used to cover both loss-based and gain-based orders, a further example of the loose use of the term 'restitution' by Parliamentary draftsman which was noted by Lionel Smith and Steve Hedley last year (or maybe this was Lionel's own example? - my memory fails me, I'm afraid).

Financial Services and Markets Act 2000 (c 8)

14 June 2000

CROSS-HEADING: Part XXV Injunctions and Restitution: Restitution orders

SECTION: 382 Restitution orders

DATE-IN-FORCE: To be appointed

TEXT:
(1) The court may, on the application of the Authority or the Secretary of State, make an order under subsection (2) if it is satisfied that a person has contravened a relevant requirement, or been knowingly concerned in the contravention of such a requirement, and--

(a) that profits have accrued to him as a result of the contravention; or

(b) that one or more persons have suffered loss or been otherwise adversely affected as a result of the contravention.

(2) The court may order the person concerned to pay to the Authority such sum as appears to the court to be just having regard--

(a) in a case within paragraph (a) of subsection (1), to the profits appearing to the court to have accrued;

(b) in a case within paragraph (b) of that subsection, to the extent of the loss or other adverse effect;

(c) in a case within both of those paragraphs, to the profits appearing to the court to have accrued and to the extent of the loss or other adverse effect.

(3) Any amount paid to the Authority in pursuance of an order under subsection (2) must be paid by it to such qualifying person or distributed by it among such qualifying persons as the court may direct.

(4) On an application under subsection (1) the court may require the person concerned to supply it with such accounts or other information as it may require for any one or more of the following purposes--

(a) establishing whether any and, if so, what profits have accrued to him as mentioned in paragraph (a) of that subsection;

(b) establishing whether any person or persons have suffered any loss or adverse effect as mentioned in paragraph (b) of that subsection and, if so, the extent of that loss or adverse effect; and

(c) determining how any amounts are to be paid or distributed under subsection (3).

(5) The court may require any accounts or other information supplied under subsection (4) to be verified in such manner as it may direct.

(6) The jurisdiction conferred by this section is exercisable by the High Court and the Court of Session.

(7) Nothing in this section affects the right of any person other than the Authority or the Secretary of State to bring proceedings in respect of the matters to which this section applies.

(8) "Qualifying person" means a person appearing to the court to be someone--

(a) to whom the profits mentioned in subsection (1)(a) are attributable; or

(b) who has suffered the loss or adverse effect mentioned in subsection (1)(b).

(9) "Relevant requirement"--

(a) in relation to an application by the Authority, means a requirement--

(i) which is imposed by or under this Act; or

(ii) which is imposed by or under any other Act and whose contravention constitutes an offence which the Authority has power to prosecute under this Act;

(b) in relation to an application by the Secretary of State, means a requirement which is imposed by or under this Act and whose contravention constitutes an offence which the Secretary of State has power to prosecute under this Act.

(10) In the application of subsection (9) to Scotland--

(a) in paragraph (a)(ii) for "which the Authority has power to prosecute under this Act" substitute "mentioned in paragraph (a) or (b) of section 402(1); and

(b) in paragraph (b) omit "which the Secretary of State has power to prosecute under this Act".