MIFID Supervision

Authorisation Conditions

The Central Bank may impose conditions or requirements relating to an associated or related undertaking of an investment firm or market operator. It may amend and revoke them from time to time. It may require the market operator of the regulated market to change or revoke the rules of the market or amend them.

The above conditions may be imposed in respect of

• investment firms,
• market operators of a regulated market,
• proposed investment firms or market operators,
• classes of investment firms,
• associated or related undertakings of the investment firm or market operator,

They may relate to any matter the Bank considers appropriate for the proper and orderly regulation and supervision of investment firms, market operators and regulated markets and the protection of investors.  The Bank may impose

• conditions and requirements on an investment firm or a market operator relating to
• level of training,
• qualification and professional competence of managers, officers or employees;
• provision of information as may be specified by the Bank.

Central Bank Directions

Where the Bank considers it necessary for the proper and orderly regulation and supervision of investment firms or market operators, it may give directions in relation to any of the following matters:

• proposed or current actual investment firms or market operators;
• investment firms or market operators of regulated markets;
• former investment firms and market operators;
• directors of any of the above;
• persons purporting to act or whom the Bank reasonably believes are acting on behalf of any of the above;
• persons who are directors or responsible for the management of any of the above;

who have failed to cooperate with an authorised officer or an inspector appointed in relation to any matter relating to the firm, an acquisition transaction, or directing the cessation by any person of any practice that, in the opinion of the Bank, is contrary to Irish investment services law. The direction takes effect from the date specified by the Bank.

The Central Bank may arrange for the publication of warning notes in newspapers circulating in the State where it reasonably believes that a company registered in the State or another person operating without authorisation.

Suspension Directions

Where the Bank is of the opinion that it is necessary in the interests of the proper and orderly regulation and supervision of investment markets or market operators, for the protection of investors or both or in the below-mentioned circumstances, the Bank may give a direction in writing to the investment firm or market to suspend for such period not exceeding 12 months, as may be specified in relation any of the following:

• provision of any investment service;
• making of payments to which they apply;
• acquisition or disposal of assets and liabilities;
• entering into transactions or agreements of any specified type or entering them except in specified circumstances or to a specified extent;
• soliciting business from persons of a specified kind other than from such persons or in a specified country;
• carrying on business in a specified manner or otherwise than in a specified manner;
• if unauthorised by the Bank, trading in any financial instrument;
• if unauthorised by the Bank, admission to trading, listing, marketing or
• otherwise facilitating the trading of a financial instrument on any market.

The relevant circumstances mentioned above are as follows:

• that the investment firm or market operator has, in the Bank’s opinion, become unable to meet its obligations to creditors, clients or both;
• is not maintaining or unlikely to be in a position to maintain adequate capital resources with regard to the nature and volume of its business or no longer complies with capital and other financial requirements specified by the Bank from time to time;
• has failed to comply with any condition or requirements under the Regulations and circumstances are such that in the Bank’s opinion, the stability and soundness of the firm is materially affected by this failure;
• is conducting business in a manner as to jeopardise or prejudice money or investment instruments held or controlled on behalf of clients or the rights and interests of those clients;
• or has failed to provide to the Bank within such reasonable time as may be specified such information as the Bank may reasonably request for the purpose of the Bank’s functions under the Regulations.

A direction may be given to a particular person, persons generally, persons who fall into a class or by any other designation or for a period of time.

Court Order to Conform

The Bank may apply to the Court for orders confirming directions made.  The application is by way of summary procedure.

Where the direction is in force, no proceedings by way of winding up, dissolution, bankruptcy, receivership or any equivalent proceedings under which an assignee or other person becomes responsible for the firm or operator’s affairs may be commenced or continued, and no assets may be seized, sequestered or distrained except with the prior sanction of the Court.

The Court may hear evidence from creditors and make appropriate interlocutory orders.  It may hear proceedings otherwise than in public.  A creditor who is affected by a direction may apply to set the direction aside if it affects the interests of the creditor to a material degree.

CB Winding Up

The Bank may present a petition to wind up an investment firm or market operator on the grounds that it is in the opinion of the Bank

• is or may be unable to meet its obligations to clients or creditors;
• its authorisation has been withdrawn or revoked;
• it has ceased to carry on business as an investment firm or market operator;
• the Bank considers it is in the interests of the proper and orderly regulation and supervision of investment firms or regulated markets or is necessary for the protection of investors that the firm or the operator be wound up;
• that the investment firm or operator has failed to comply with the directions given.

Where a firm is being wound up voluntarily, and the Bank has reasons to believe that any of the above grounds apply, then the Bank may apply to have the firm wound up by Court.

The Bank may authorise an officer or employee or other qualified person to attend creditors meetings.  It may appoint an officer or employee or other qualified person to be a member of a committee of inspection in relation to the firm or market operator.

The Bank may apply for a petition for the dissolution of a partnership or equivalent.

Enforcement

The Bank has the general powers of enforcement under the other legislation and general financial services legislation.  It may appoint authorised officers.

The authorised officers have wide powers of investigation in relation to investment firms, regulated market or market operators or of proposed entities or persons who are providing investment or ancillary services or their associates or related undertakings.

They may enter premises and search and inspect them and any books and records and documents on the premises.  They may inspect and take copies of documents.

They made secure premises for later inspection.  They may require persons carrying on the business or employees to give such information as they reasonably require.  They may require persons in charge of data equipment to operate it in order to assist.

They may summon, at a reasonable time, other persons employed in connection with the activity

• to give information which may be reasonably required in relation to the activity;
• produce books, records and documents under their control;
• require any person employed at the premises to prepare a report on specified aspects of the business or explain entries in any documents furnished.

They may communicate with any client of the firm or market operator for the purpose of confirming the investment or ancillary services which were provided to the client or activity carried on.

Duty to Provide Information

A person who has in his possession or procurement any of the books, records, or documents above shall produce them on request and permit them to be inspected. He /it shall give information requested by the authorised officer and other assistance as is reasonable in the circumstances. There is an exception in respect of information held by solicitors or barristers subject to legal professional privilege.

At such times as the Central Bank may specify from time to time, an investment firm or market operator or any person carrying on the business of an associated or related undertaking shall furnish such information and returns that relate to the same as the Bank considers necessary for the due performance of its functions under the Regulation.

The Regulation applies to the business of an associated or related undertaking only to the extent that the information sought by the Bank is materially relevant to the proper appraisal of the business of the investment firm or regulated market.

The duty to provide information, documents and materials extends to examiners, liquidators, receivers, official assignees or persons who appears to the Bank or to the authorised officer to have the information, documents or material in their possession or under their control.

If a person refuses to produce a document, cooperate or answer questions, the authorised officer may certify the refusal to the Court.  The Court will inquire into the matter and make such direction as it thinks fit after hearing witnesses who may be produced.

An order made by the Court may include an order requiring the person to attend or re-attend before the officer, produce documents, answer particular questions, or requiring the person not to answer a particular question or produce a particular document.

A person shall not obstruct or interfere with an authorised officer in the exercise of his powers.  A person shall not, without reasonable excuse, fail or refuse to comply with requests or requirements made under the Regulations.  A person shall not give an authorised officer information which he knows or ought reasonably to know is false or misleading.

Appointment of Inspectors

Without prejudice to the above powers, an inspector may be appointed by the Court, where it is required for the proper and orderly regulation and supervision of firms or the protection of investors or to investigate the affairs of an investment company or market operator.  The inspector has powers of investigation equivalent to those of an authorised officer.

The inspector may examine persons on oath and serve written interrogatories on employees, shareholders, agents of the firm or market operator.  The inspector has extensive powers where an officer, shareholder or agent of the investment firm refuses or fails to produce documents, attend, answer questions, etc.

The refusal may be certified to the Court in much the same way as with an authorised officer. The Court may then grant an order or direction requiring the relevant matter, attendance, production of books, answering questions, etc. or may limit the order in some way.

The expenses and fees relating to an investigation may be ordered by the Court to be paid by the persons the subject of the investigation.  Where any such person is

convicted on indictment of an offence instituted as a result of an investigation,

• ordered to pay damages or
• restore property as a result of the same or awarded damages, or is a person to whom property is restored in proceedings brought as a result of the investigation,
• each such may be ordered to pay or repay part of the expenses or fees.

There are provisions in the case of third parties who have had property restored to them limiting their liability to one-third of the damages recovered, awarded, or property restored.

Inspector’s Report

An inspector may make an interim report during the investigation. At the conclusion of the investigation, he shall make a final report to the Court, with or without an interim investigation. The report shall inform the Court of the matters coming to the inspector’s knowledge as a result of the investigation tending to show that a criminal offence has been committed.

When a report is presented to it, the Court shall forward a copy to the Bank, furnish a copy to the firm, or to such other persons as the Court thinks fit, including shareholders or creditors. It may cause the report to be printed and published.

After consideration of the report, the Court has powers to order the wind-up of the firm, make orders for the purpose of remedying any disadvantage suffered by persons whose interests are adversely affected by the conduct of the affairs of the firm, having regard to the interests of persons who would be adversely affected by the order.

There are also powers for the Bank to appoint an inspector to investigate and report on matters relating to investment firms on a market, regulated markets or other undertakings, which are associated or related to the same.

It may relate to compliance, any conditions of the Regulations, codes of conduct, authorisation, etc. or other matters as the Bank considers appropriate. An appointment may be made by the Bank if, in its opinion, there are circumstances suggesting that it is necessary for the effective administration of the law relating to investment firms or regulated markets or for the effective discharge by the Bank of its statutory functions under the Regulations.

A document purporting to be a copy of a report by an inspector appointed under the Regulations is admissible in civil proceedings as evidence of the facts set out without further proof unless the contrary is shown and of the opinion of the inspector relating to the matter contained in the report.

Offences

The Regulations contain a range of offences in respect of the contravention of the Regulation.  There is provision for offences by body corporates.

Where the offence is committed by a body corporate with the connivance, consent, or approval or attributable to the wilful neglect of any director, manager, or secretary of a person purporting to act as such, that person may also be guilty of the offence.

Summary proceedings may be brought by the Bank.  It must generally be brought within 12 months of the act concerned.

There are provisions for the appeal of certain decisions and directions of the Bank under Part VIIA of the Central Bank Act 1942 to the  Financial Services Appeals Tribunal.