Secretary of State for Business Innovation and Skills v Aaron & Ors [2009] EWHC 3263 (Ch) (10 December 2009)

Secretary of State for Business Innovation and Skills v Aaron & Ors [2009] EWHC 3263 (Ch) (10 December 2009)

The second and third defendants, as directors of DMA, failed to ensure regulatory compliance, permitted the mis-selling of high-risk SCARPS through misleading marketing and inadequate risk disclosure, and failed to maintain adequate records and compliance procedures. These failures, individually and cumulatively, rendered them unfit to be concerned in the management of a company under s.6 CDDA. Delegation of compliance functions did not absolve them of responsibility, particularly given their expertise and involvement in the business. Their conduct contributed to DMA's insolvency and exposed the public to significant financial risk.

Citation
[2009] EWHC 3263 (Ch)
Parties
Claimant: Secretary of State for Business Innovation and Skills; First Defendant: David Meyer Aaron; Second Defendant: Andrew Cameron Jones; Third Defendant: Michael Meyer Aaron
Jurisdiction
England and Wales
Judgment Date
10 December 2009
Procedural Posture
Company Directors Disqualification Act 1986 Application / Judgment After Trial
Outcome
Application granted; disqualification orders made against the second and third defendants.
Legal Topics
Directors' Disqualification, Mis Selling of Financial Products, Regulatory Compliance, Fiduciary Duties, Insolvency
Company Law Financial Regulation Directors' Disqualification Mis Selling of Financial Products Regulatory Compliance Fiduciary Duties Insolvency

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Parties

Secretary of State for Business Innovation and Skills

Claimant

David Meyer Aaron

First Defendant

Andrew Cameron Jones

Second Defendant

Michael Meyer Aaron

Third Defendant

Procedural Posture

Company Directors Disqualification Act 1986 Application / Judgment After Trial

Legal Issues

  1. 1 Whether the conduct of the second and third defendants as directors of DMA rendered them unfit to be concerned in the management of a company under s.6 CDDA
  2. 2 Whether there was mis-selling of SCARPS in breach of regulatory duties
  3. 3 Whether the directors failed in compliance and record-keeping obligations

Ratio Decidendi

The second and third defendants, as directors of DMA, failed to ensure regulatory compliance, permitted the mis-selling of high-risk SCARPS through misleading marketing and inadequate risk disclosure, and failed to maintain adequate records and compliance procedures. These failures, individually and cumulatively, rendered them unfit to be concerned in the management of a company under s.6 CDDA. Delegation of compliance functions did not absolve them of responsibility, particularly given their expertise and involvement in the business. Their conduct contributed to DMA's insolvency and exposed the public to significant financial risk.

Court Disposition

Application granted; disqualification orders made against the second and third defendants.

Orders

  • Andrew Cameron Jones and Michael Meyer Aaron are disqualified from acting as directors or being concerned in the management of a company for a period to be determined.
  • No order as to costs against the first defendant, who had already given an undertaking.