(LlvtN)

FORM 14.7

Form of citation in petition

Rule 14.7(2)

CITATION

Edinburgh, the SiXTeEuT !1 day of October, 2009.

To: Stephen Antonia Farley, 15a Dublin Street, Edinburgh, EH1 3PG.

IN HER MAJESTY'S NAME AND AUTHORITY, and in the name and authority of LordKinclaven,I, ALAil tujAf-g€\-u o Messenger-At-Arms, 19 Dublin Street Lane South,Edinburgh, EHI 3PX, serve the attached petition and interlocutor of the court on you.

The interlocutor requires you, if so advised, to lodge answers to the petition and desire andrequire you to pay due respect and obedience to the Interim Interdict thereby granted.

If you intend to lodge answers to the petition you must lodge them at the Office of Court,Court of Session, 2 Parliament Square, Edinburgh EHl IRQ within [21] days after the date ofservice on you of the petition. The date of service is the date stated at the top of this citationunless service has been by post in which case the date of service is the day after that date.

This I do in the presence of t)sll€f piSU,LEdinburgh, EHl 3PX, Witness.

, 19 Dublin Street Lane South,

Messenger-At-Armsl9 Dublin Street Lane SouthEdinburghEHl 3PX0 1 3 1 5 5 7 0 1 0 0

lnstructed By: McGrigors LLP, Princes Exchange, 1 Earl Grey Street, Edinburgh, EH3 9AQ,0r3r 777 7000, HLR/MFM/JMH/FI0062.00001 1

IF YOU ARE UNCERTAIN ABOUT THE EFFECT OF THIS CITATION, you shouldconsult a solicitor, Citizens Advice Bureau or other local advice agency or adviserimmediately.

73869t COS\FI4 7.FRM FORM OF CITATION PETITION

WALKER LOVEW: www.walker love .co .uk

E: admin-dept@walker love .co .uk

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E D N B L R G F t S f r o f c o iCERTIFY A TRUE COPY

ASSISTANT CLERK OF SESSION

TIIE FINANCIAL SERVICES AUTHORITY a company limite<i by guaratrtee and having itsprincipal place of business at 25 The North Colonnade, Canary- Wharf, L,ondon, El4 5HS

Petitioner

15 October 2009 Lord Kinclaven

R. Dunlop

The Lord Ordinary, having heard Counsel on the unopposed motion of thePetitioners, Allows the Minute of Amendment for the Petitioners No' 9 ofProcess to be received; Allows the Petition to be amended in terms of saidMinute of Amendm ent; Ael interim Interdicts the Second Respondent, StephenAntonia Farley, from carrying on or purpofting to carry on, whether directly orindirectly and whether by his seruants, agents or otherwise, a regulatedactivity in contravention of s. 19 of the Financial Services and Markets Act2000 by the unlawful accepting of deposits within the meaning of theFinancial Services and Markets Act 2000 (Regulated Activities) Order 2001and Decerns; Grants warrant to serve a copy of the Petition as now amendedon the Second Named Respondent, viz. Stephen Antonia Farley together witha copy of this interlocutor on a period of notice of twenty one days; Appointsthe Solicitor for the Petitioners to lodge a ceftificate of execution of suchservice in orocess.

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UNTO THE RIGHT HONOURABLE THE LORDS OF COUNCIL AND SESSION

Minute of Amendment for the Petit ioner

in the petition of

THE FINANCIAL SERVICES AUTHORITY, a company l imited by guarantee havingof business al24 f he North Colonnade, Canary Wharf, London

its pr incipal place

PETITIONER

for

lnterdict and interdict ad interim

DUNLOP for the Petitioner craves the court to allow the Petition to be amended as follows:

1. At the end of Statement of Fact 1, by insert ing the fol lowing:

"Since presentation of the Petition and the granting of interim orders in September 2008, the First

Respondents have been placed in liquidation. The Petitioner thus seeks no further order against

the First Resoondents."

2. In Statement of Fact 10,

2 . 1 . before the penult imate sentence thereof ("Accordingly, i t is necessary.. ." , by insert ing the

following:

"All of the actions of the First Resoondents as hereinbefore narrated were undertaken

under the direct ion of the Second Respondent, who was the direct ing mind and pr ime

mover in the First Respondents. Those act ions amounted to widescale taking of unlaMul

deposits despite the lack of authorisation on the part of either Respondent to carry out

regulated act iv i t ies. Whi le the l iquidat ion of the First Respondents has brought the

part icular Capital Inject ion scheme to an end, the scale of the unlawful deposit taking

referred to means that the Petitioner is reasonably apprehensive that, unless restrained,

the Second Respondent wi l l , e i ther act ing alone or through some other corporate vehicle,

seek to replicate the unlawful activities hereinbefore described.

in the penult imate sentence thereof, by delet ing the words ", and from disposing of or

deal ing with the monies held in the aforementioned bank accounts".

1

C:"NrPorrbl ' ,c i rnanage\YNEWSO\,1E\2396292 I .DOC | 5 October 2009

2 . 2 .

In the Prayer of the Petition, by deleting the words "(a) to interdict the said Cameron Farley

Limited . . . Nat ionalWestminster Bank, B George Street, Edinburgh", and by insert ing therefor the

fol lowing:

"to interdict the Second Respondent, Stephen Antonia Farley, from carrying on or purporting to

carry on, whether directly or indirectly and whether by his servants, agents or otherwise, a

regulated activity in contravention of s.19 of the Financial Services and Markets Act 2O0O by the

unlaMul accepting of deposits within the meaning of the Financial Services and Markets Act 2000

(Regulated Act iv i t ies) Order 2001" .

IN RESPECT WHEREOF

2

C:\NrPortb l \c iuranagc\YNEWSO\4 E' ,J396292 I . DOC I _5 October 2009

Edinburgh,Certified a

Signed:

Date:

UNTO THE RIGHT HONOURABLE THE LORDS OF COUNCIL AND SESSION

Certified CopyThe Petition of

TT{E FNANCIAL SERVICES AUTHORITY a company limited by guarantee ard having itsprincipal place of business at 25TheNorth Colonnade, Canary Wharl London,814 5HS

letitioner

for

Interdict and interdict ad interim

I{UMBLY SF{EWETH:-I , l'hat the petitioner is thc Frinancial Services Authority, a company limited by guarantee

and laving its principal olfices at 25 The North Colonnade, Canary Wharf, Loncion, E14

5HS. The first respondents are Cameron Farley Limited, a compan)'incolporateC under

the Companies Acts (registration number 05031602) and u'ith its princii>al place of

business at MNB Rusirress !,xc!range, 9-i0 St Airdrews Square, Edinburgh, EtI2 2AF.

fhe secold responclent is Stephen Antolia Farley, residing at The Old Mil! House, 40

Nerv Mills Road" Dalkeith, Eif22 zAQ" The second responCent is the sole <iirector of and

principal shareholder in the first respondents. These proceedings have, as their object, the

. restraininq of apprchended urongful acts which, were they to re-occur, would take effect

in Scollind. 'l'his court has iurisdiction.

2. That tlie petitioner carries out regulatory functions pursuant to the Financial Services &

Marlets Act 2000 ("FS\{A"). The petitioner carries out these ftmctions with a view to

nraintailing conficlence in the financial system, promoting public understanding of the

filancial s1,stetn, securfutg tiie appropriate degree of protection for consumers, and

reducing thc exte;i co tvhich it is possible fbr a business carried out in contravention of

the general prohibition to bc rised for a purpose {jonllectcd with financial crime. The

petitioner is empowered under FSMA to seek various orders from the court, including

interdict, in the event of a person contravening a relevant requirement of the Act.

3. Section 19 of FSMA provides:- uNo person may carry on a regulated activity in the

United Kingdom, or purport to do so, unless he is-� (a) an authorised person; or (b) an

exempt person."

Section 22 provides:-

" (l ) An activity is a regulated activity for the purposes of this Act if it is an activity of

a specified kind which is carried on by way of business and -

(a) relates to an investment of a specified kind; or

(b) in the case of an activity of a kind whtch is also specified for the purposes

ofthis paragraph, is carried on inrelationto property ofany kind'

(4) "Investment" includes any asset, right or interest.

(5) "Specfied" means specified in an order made by the Treasury'"

Section 23 makes it a criminal offence to breach the general prohibition in section 19' If

an offence under FSMA is committed by a body corporate, an officer of the body

corporate is also guilty of the offence if the offence was committed with his consent or

connivance, or was attributable to any neglect on the part of the officer. Reference is

made to section 400, FSMA.

4. Section 380 of FSMA authorises the petitioner to make application to the Court of

Session in the event that there has been, or is likely to be, a contravention of a

requirement imposed by or under FSMA. Section 380(1), (3) & (6) provide:-

*(I) If on the application of the Authority..-.the court is satisfied-

(a) that there is a reasonable likelihood that any person will contrqvene a relevant

requirement, or

(b) that any person has contravened a relevant requirement and that there is a

reasonable likelihood that the contravention will continue or be repeated,

the court may make an order restraining (or in Scotland an interdict prohibiting) the

contravention.

(3) If, on the application of the Authority.....the court is satisfied that any person may

have -

(a) contravened a relevant requirement, or

(b) been knowingly concerned in the contravention of such a requirement,

it may make an order restraining (or in Scotland, an interdict prohibiting) him from

disposing of, or otherwise dealing with, any assets of his which it is satisf ed he is

reasonably likely to dispose of or otherwise deal with'

" Relevant requirement " -

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

(i) which is imposed by or under this Act --."

That the first and second respondents are not authorised in terms of FSMA to conduct

any regUlated activity. The petitioner has become aware that the first respondents are

offering an investment called a "Capital lnjection" to their clients. The petitioner has

been provided with copies of four documents which the first respondents have been

providing to their clients. These four documents are (i) general terms & conditions for

the capital injection, (ii) an interim agreement, (iii) a letter of intent in relation to profit

sharing, and (iv) a notification form. The general terms & conditions, interim

agreement and letter ofintent have been signed by the second respondent on or about

June 2007. copies of these four documents are produced herewith.

That in terms of these documents, the first respondents invite clients to invest between

f1,000 and f1,000,000 in the first respondents. The general conditions state that

"Capital injecttons in Cameron Farley Ltd are capital injections only and do not

represent share capital or any right to exercise any control over Cameron Farley

,//,. No indication is provided in the documentation as to how the first respondents

will use the monies to fund a return for the client. The client is offered a return by way

of interest comprising (a) a fixed rate of 9.25% per annum, and (b) a variable rate at

the discretion of the first respondents. The client is also offered a profit share whereby

the client is entitled to a share in the profit on any capital gain if the whole share

capital or business of the first respondents is sold. The calculation of the profit share is

at the absolute discretion of the second respondent with no clearly defined criteria. The

general conditions provide that an "account document" will be issued which is the

clients' certificate confirming the capital injection amount. The general conditions

state that the client may give written notice requesting repayment of the capital

injection. On the repayment date, "Cameron Farley Limited will transfer the value of

your account with Cameron Farley Ltd to the capital injector". The client may also

sive notice to close their account.

7. That the documentation invites customers to pay money by way of cheque, cash or

bank transfer into two Capital Injection Accounts held by the first respondents- These

bank accounts are held with the National Westminster Bank at 8 George Street,

(6)

(a)

5 .

6 .

Edinburgh (sort code 60 30 20). The bank accounts are identified in the documents as

having account numbers 28096991 and NXNF JSQG-USD00. The petitioner has

received information that bank account 28096991 has had approximately f24.5

million credited over the previous 12 months and that the balance as at 28 August

2008 was fL,165,364. Bank account NXNF JSQG-USD00 had a balance on 28 August

2008 o f $ i ,165,907.

8. That the petitioner has had reason to be concerned about the activities of the

respondents, including the information given by them in response to the petitioner. In

about June 2005, the petitioner made investigations with the respondents in respect of

possible unregulated activity. In the course of those investigations, the petitioner

discovered that the first respondents' website included a claim that the second

respondent had completed a Securities lnstitute Certificate in Investment Management

whereas the petitioner's inquiries revealed that he had failed these exams and did not

hold such a certificate. On about 19 December 2005, the second respondent advised

the petitioner that he had become an authorised representative of Personal Touch

Financial Services Ltd. Subsequently inquiries revealed that Personal Touch Financial

Services Ltd had rejected his two applications for authorisation. At an unannounced

site visit on 4 April 2007, the second respondent initially advised the petitioner's

officers that all foreign exchange dealing for clients was organised through a US

company called Gain. The second respondent subsequently admitted that the first

respondents carried out some foreign exchange dealings on behalf of clients. In an

application for authorisation submitted to the petitioner on behalf of a related

company, Cameron Farley Investments Limited, the second respondent intentionally

failed to disclose previous investigations which the petitioner had had into his business

activities. The petitioner has also become aware that the second respondent has a

conviction for theft from 1991 and served a period of imprisonment following a

conviction for fraud in 1993.

9. That the petitioner has reasonable cause to believe that the first respondents are carrying

out a regulated activity, namely accepting deposits, without being authorised to do so in

terms of FSMA. The Financial Services and Markets Act 2000 (Regulated Activities)

Order 2001, article 5, defines the circumstances in which the accepting of deposits is a

specified kind of activity. Article 5 provides:-

* (l) Accepting deposits ts a specified kind of activity if-

(a) money received by *oy of deposit is lent to others, or

(b) any other activity of the person accepting the deposit is financed wholly

or to a material extent, out of the capital of or interest on money received by

way of deposit.

(2) In paragraph (1), "deposit" means a sum of money, other than one excluded by

any of articles 6 to 9A, paid on terms -

(a) under which it will be repaid, with or without interest or premium and

either on demand or at a time or in circumstances agreed by or on behalf of

the person making the payment and the person receiving it, and

ft) which are not referable to the provision of property (other than currency)

or services or the giving of security.

(3) For the purposes of paragraph (2), money is paid on terms which are referable to

the provision of property or services or the giving of security if, and only f, -

(a) it is paid by way of advance or part payment under a contract for the sale,

hire, or other provision of property or services, and is repayable only in the

event that the property or seryices is or are not in fact sold, hired, or

otherwise provided;

(b) it is paid by way of security for the performance of a contract or by way

of security in respect of loss which may result Jiom the non-performance of a

contract; or

(c) without prejudice to sub-paragraph (b), it is paid by way of security for

the delivery up or return of any property, whether in a particular state of

repair or otherwise. "

10. That the first respondents are accepting sums of money of between f1,000 and

f1,000,000 which are repayable on notice being given by the client. The sums accepted

are purportedly being used as capital to fund the business activities of the first

respondents. The investment being offered by the first respondents is not covered by any

of the exclusions in the said Order. The first respondents have no authorisation under

I-SMA, nor are they exempt from the requirements of FSMA. ln the foregoing

circumstances, the first respondents are taking part in deposit taking activities without any

authorisation to do so in terms of FSMA. The first respondents have contravened a

relevant requirement of FSMA and there is a reasonable likelihood that they will continue

to contravene such a requirement. Substantial sums are held in the first respondents' bank

accounts due to the illegal deposit taking activities. It is necessary to obtain an order

prohibiting the respondents from dealing with any of the monies in the bank accounts

pending determination of the full extent of the illegal deposit taking activities. Further,

the petitioner's experience is that illegal deposit taking schemes often result in substantial

losses to clients with subsequent allegations of fraud being made. The first respondents'

bank statements identifu large deposits from investors and regular sums being paid out to

investors but there is little or no evidence that the returns to investors are funded fiom

genuine investment returns. Accordingly, it is necessary for the petitioner to seek interdict

restraining the respondents from engaging in illegal deposit taking, and from disposing of

or dealing with the monies held in the aforementioned bank accounts" Having regard to

the balance ofconvenience, interdict ad interim is also sought.

11. This petition is presented at common law and under section 380 of FSMA.

PLEAS-IN-LAW

t. The petitioner having reasonable gtounds to apprehend that the respondents have been

engaged in illegal deposit taking and continue to be so engaged, interdict should be

pronounced as prayed for.

2. The balance of convenience favouring the granting of interdict ad interim such order

should be pronounced..

MAY IT TF{EREFORE please your

I-ordships to intimate this application on the

Walls; to appoint the same to be served upon

the persons named and designed in the

Schedule hereto; to appoint them to lodge

Answers hereto, if so advised, within twenty

one days of such intimation and service; and

thereafter, with or without answers, (a) to

interdict the said Cameron Farley Limited

and Stephen Antonia Farley, whether

directly or indirectly and whether by their

servants, agents or otherwise, from carrying

on or purporting to carry on a regulated

activify in the United Kingdom and that by

accepting deposits in terms of a purported

Capital lnjection scheme, and (b) to interdict

the said Cameron Farley Limited and

Stephen Antonia Farley, whether personally

or through their servants or agents, from

disposing of, or otherwise dealing with, any

monies held in the first respondents' bank

accounts (account numbers 28096991 and

NXNF JSQG-USD00) held with the

National Westminster Bank, 8 George

Street, Edinburgh; and for such interdict ad

interirU; and to find the respondents and any

other person opposing this application liable

to the petitioner in the expenses hereto; and

to decem; or to do further or otherwise in the

premises as to your Lordships shall seem

proper.

According to Justice, etc,

SCI{EDULE FOR SERVICE

Persons upon whom service is sought in common form:-

1. Cameron Farley Limited, MWB Business Exchange, 9-10 St Andrews Square, Edinburgh,

EHz 2AF.

2. Stephen Antonia Farley, The Old Mill House,40 New Mills Road, Dalkeith, EH222AQ

3. National Westminster Bank, 8 George Street, Edinburgh

Certified Copy

The Petition

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