Company directors’ disqualification proceedings arising out of insolvent financial planning company

Joanna Gray, University of Newcastle

Background

On 7 June this year the Chancery Division of the High Court made an interesting ruling in proceedings brought under the Company Directors Disqualification Act 1986 (CDDA) by the secretary of state for trade and industry, against three directors of an insolvent financial services company, David M Aaron (Personal Financial Planners) Ltd. The company had originally been an IFA partnership but had been formed on the incorporation of that business in 2000. In June 2003 FSA commenced an investigation into the company’s activities which culminated in findings of regulatory breaches involving, amongst other things, the mis-selling of structured capital at risk investment products (SCARPs) to investors. In December 2003 the company went into administration. Investor claims against both the company and the previous partnership business amounted to some £11.9m and these were met by the Financial Services Compensation Scheme.