Misleading Statements and Practices
Date produced: 6 July 2011
Title: Financial crime
Offence: Misleading Statements and Practices
Legislation: s.397 Financial Services and Markets Act 2000
Statutory Limitations & Maximum Penalty: 7 years imprisonment
Sentencing range: Variable
Aggravating and Mitigating Factors
- The amount involved
- The use to which money was put (spending on luxuries more venal than on necessities)
- Breach of position trust, such as by employee, director or trustee
- Whether vulnerable victims were targeted
- Extent of loss - intended and actual
- Extent of gain - intended and actual
- The period over which and the persistence with which the fraud was carried out
- Guilty plea
- Voluntary repayments
- Personal factors such as illness, disability, family difficulties, etc
Relevant Sentencing Council Guideline
Guidelines for fraud do not apply
Relevant sentencing Guidelines
None
Relevant Sentencing Case Law
FELD [1999] 1 Cr. App. (S) 1
Following convictions for 9 counts of using a false statement and 3 counts of making misleading statements contrary to the Financial Services Act 1986 s.47 (now Financial Services and Markets Act 2000 s.397(3)) the appellant was sentenced to a total of 8 years. This was reduced on appeal to 6 years. He had been the Managing Director of a hotel company which overstated the profit forecast, understated the liabilities and overstated the cash balance when issuing a Rights Issue Circular. Forged documents were sent to accountants, and the company was arguably insolvent. He had borrowed £1.375 million from the banks and led an expensive lifestyle. He had been of good character.
R v RIGBY AND BAILEY [2007] 1 Cr.App.R. (S) 73
R had been the chairman and chief executive officer and B had been the chief financial officer of a company listed on the London Stock Exchange. The company issued a false and misleading trading statement as a result of which its share price rose and the value of R's own shareholding in the company also rose although he did not benefit from this temporary increase. The share price subsequently fell dramtically. The company had to restructure and seek new financing and R and B were employed to assist in that process.
On appeal, R received an 18 month custodial sentence and B received 9 months.
A subsequent appeal considered the issue of benefit for the purposes of confiscation. It was held that a temporary, unrealised increase in the value of a shareholding would not amount to a benefit or pecuniary advantage to a defendant for the purpose of confiscation proceedings under the Criminal Justice Act 1988 Part VI. In addition their salary earned whilst employed to assist in the company restructure was not sufficiently linked to the offence to be included in any benefit figure for confiscation.
Ancillary Orders
(Archbold paragraph references in brackets)
- Compensation Orders: (5-411)
- Deprivation Orders: (5-439)
- Disqualification from acting as a Company Director: (5-851)
- Financial Reporting Orders: (5-886c) - limited applicability
Consider Also
- Confiscation
Links
Archbold 30-215d
