Financial Services Authority v Sinaloa Gold Plc & Ors

Financial Services Authority v Sinaloa Gold Plc & Ors

The FSA established a serious issue to be tried regarding contraventions of the FSMA 2000 and a real risk of dissipation of assets by all defendants, justifying continuation of the freezing injunction in the amount of funds received from investors. The court held that while the FSA, as a public enforcement authority, need not provide a cross-undertaking in damages to respondents, it must provide the standard cross-undertaking in damages to innocent third parties, including Barclays Bank PLC.

Parties
Claimant: Financial Services Authority; Defendant: Sinaloa Gold PLC; Defendant: Mr Glen Lawrence Hoover; Defendant: PH Capital Invest; Intervener: Barclays Bank PLC
Jurisdiction
England and Wales
Judgment Date
25 January 2011
Procedural Posture
Interim Injunction Application / Adjourned Hearing of Application to Continue Interim Injunctive Relief (freezing Order)
Outcome
Freezing injunction continued against all defendants; FSA required to provide standard cross-undertaking in damages to third parties.
Legal Topics
Freezing Injunctions, Cross Undertakings in Damages, Boiler Room Fraud, Financial Services and Markets Act 2000, Third Party Rights Under Injunctions
Financial Regulation Civil Procedure Injunctions Freezing Injunctions Cross Undertakings in Damages Boiler Room Fraud Financial Services and Markets Act 2000 Third Party Rights Under Injunctions

Case Brief

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Parties

Financial Services Authority

Claimant

Sinaloa Gold PLC

Defendant

Mr Glen Lawrence Hoover

Defendant

PH Capital Invest

Defendant

Barclays Bank PLC

Intervener

Procedural Posture

Interim Injunction Application / Adjourned Hearing of Application to Continue Interim Injunctive Relief (freezing Order)

Legal Issues

  1. 1 Whether the FSA is entitled to a freezing injunction against the defendants under FSMA 2000 and related statutes
  2. 2 Whether there is a serious issue to be tried regarding contraventions of FSMA 2000
  3. 3 Whether there is a real risk of dissipation of assets by the defendants

Ratio Decidendi

The FSA established a serious issue to be tried regarding contraventions of the FSMA 2000 and a real risk of dissipation of assets by all defendants, justifying continuation of the freezing injunction in the amount of funds received from investors. The court held that while the FSA, as a public enforcement authority, need not provide a cross-undertaking in damages to respondents, it must provide the standard cross-undertaking in damages to innocent third parties, including Barclays Bank PLC.

Court Disposition

Freezing injunction continued against all defendants; FSA required to provide standard cross-undertaking in damages to third parties.

Orders

  • Continuation of freezing injunction against all defendants up to the amount of funds received from investors, subject to minor adjustments.
  • FSA not required to provide cross-undertaking in damages to respondents.