Court of Appeal considers the concept of “by way of business” in the context of regulated activities – In the case of R v Napoli [2012] EWCA Crim 1129, the Court of Appeal (Criminal Division) considered what constituted “by way of business” in the context of the regulated activity of accepting deposits. The Court concluded that accepting two deposits could amount to accepting deposits by way of business.
This decision emphasises that care should be taken not to inadvertently conduct a regulated activity without authorisation or an additional regulated activity outside the scope of a Part IV permission; an activity conducted on a small number of occasions can still constitute the carrying out of a regulated activity by way of business.
The defendant, Mr Napoli, was the chairman of a corporation which had received two deposits of money over 18 months apart.
Mr Napoli was charged with the offence of carrying out a regulated activity without authorisation in breach of the general prohibition contained in section 19 of the Financial Services and Markets Act 2000. Mr Napoli accepted that he had carried on the regulated activity of accepting deposits in the UK (as defined in Article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001), or purporting to do so, when he was not authorised to do so or exempt from such authorisation, but denied that he had done so by way of business.
Relying on Article 2(1) of Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001, Mr Napoli contended that he was not to be regarded as having accepted deposits by way of business because he only accepted deposits on particular occasions and did not hold himself out as accepting deposits by way of business.
The Court of Appeal heard an appeal from an application that there was no case to answer.
The Court of Appeal dismissed the appeal and took the view that the judge was right to reject the submission of no case to answer.
Key points of the judgment are summarised below:
• there was evidence from which a jury properly directed could conclude that Mr Napoli had accepted the deposits, or purported to do so, by way of business. For example, the deposits were of very large sums of money and were made to the company of which Mr Napoli was the chairman.
Mr Napoli had plainly purported to accept deposits by way of business by offering depositors an investment opportunity; and
• therefore, it would have been open to the jury to conclude that Mr Napoli had held himself out as accepting deposits on a day-to-day basis, and these two deposits were sufficient to constitute the regulated activity of accepting deposits.
A copy of the judgment is available.
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