The Financial Conduct Authority v Capital Alternatives Ltd & Ors

The Financial Conduct Authority v Capital Alternatives Ltd & Ors

The schemes constituted collective investment schemes under section 235 FSMA because the property (the farm or forest as a whole) was managed collectively by or on behalf of the operator, and the arrangements deprived investors of day-to-day control. The management of individual plots was superficial and did not alter the fundamentally collective nature of the schemes. The absence of pooling of profits/income in some schemes did not prevent them from being CISs, as the property was managed as a whole. The appeal was dismissed.

Parties
Claimant/respondent: The Financial Conduct Authority; Defendants/appellants: Capital Alternatives Limited and others
Jurisdiction
England and Wales
Judgment Date
25 March 2015
Procedural Posture
Civil Appeal / Appeal From High Court Judgment on Preliminary Issue
Outcome
Appeal and cross-appeal dismissed
Legal Topics
Collective Investment Schemes, Interpretation of Section 235 FSMA, Pooling of Contributions and Profits, Management as a Whole, Regulated Activities, Restitution Orders
Financial Services Law Securities Regulation Collective Investment Schemes Interpretation of Section 235 FSMA Pooling of Contributions and Profits Management as a Whole Regulated Activities Restitution Orders

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 12 Party arguments 2 Amounts and remedies 4
Sign in to unlock

Parties

The Financial Conduct Authority

Claimant/respondent

Capital Alternatives Limited and others

Defendants/appellants

Procedural Posture

Civil Appeal / Appeal From High Court Judgment on Preliminary Issue

Legal Issues

  1. 1 Whether the African Land and Carbon Credits schemes constituted collective investment schemes (CISs) under section 235 of the Financial Services and Markets Act 2000 (FSMA)
  2. 2 Whether the property was managed as a whole by or on behalf of the operator
  3. 3 Whether there was pooling of contributions and/or profits/income

Ratio Decidendi

The schemes constituted collective investment schemes under section 235 FSMA because the property (the farm or forest as a whole) was managed collectively by or on behalf of the operator, and the arrangements deprived investors of day-to-day control. The management of individual plots was superficial and did not alter the fundamentally collective nature of the schemes. The absence of pooling of profits/income in some schemes did not prevent them from being CISs, as the property was managed as a whole. The appeal was dismissed.

Court Disposition

Appeal and cross-appeal dismissed

Orders

  • Schemes declared to be collective investment schemes under section 235 FSMA
  • No change to High Court orders; regulatory consequences to follow