Capital Solutions Limited, Stillwater Worldwide Limited, Stillwater Investment Enterprise Limited, Philip Anthony John Montague, Terence Joseph Scullion, David John de Carteret (2017-06-14)

Summary

This is a public statement issued by the Guernsey Financial Services Commission (GFSC) on 14 June 2017 setting out enforcement action taken against Capital Solutions Limited, its former sub-investment advisor and promoter entities Stillwater Worldwide Limited and Stillwater Investment Enterprise Limited, and three individuals connected with Capital Solutions Limited: Philip Montague, Terence Scullion and David De Carteret. It follows an investigation into unlicensed controlled investment business, poor record-keeping, and failures to meet minimum licensing criteria and corporate governance standards.

• Findings: Stillwater Worldwide Limited and Stillwater Investment Enterprise Limited carried on controlled investment business (acting as sub-investment advisor and promoter to funds within a Guernsey authorised collective investment scheme) without the required licence between 2009 and 2015; Capital Solutions Limited and its directors were found not fit and proper under the Minimum Criteria for Licensing, having failed to keep adequate client and company records, lost records after an IT dispute, and shown weak corporate governance and board oversight.
• Financial penalties: £35,000 imposed on Mr Montague, £21,000 on Mr Scullion and £10,500 on Mr De Carteret under section 11D of the Financial Services Commission Law (each reflecting a 30 percent settlement discount); no penalty was imposed on Capital Solutions Limited because it is insolvent, though one would otherwise have been imposed.
• Prohibition orders: Mr Montague is prohibited from performing any function in relation to business carried on by any entity licensed under the Regulatory Laws for 7 years, Mr Scullion for 5 years, and Mr De Carteret for 3 years and 6 months.
• Disapplication of exemption: The exemption under section 3(1)(g) of the Fiduciaries Law is disapplied in respect of Mr Montague for 7 years, Mr Scullion for 5 years and Mr De Carteret for 3 years and 6 months.

Capital Solutions Limited is no longer licensed by the Commission, and Mr Scullion and Mr De Carteret are noted to have conducted an orderly wind-down of the company. The statement is issued under section 11C of the Financial Services Commission Law and serves as a record of concluded enforcement action rather than imposing new ongoing regulatory requirements on the wider industry.

Key obligations

• Mr Montague must not perform any function in relation to business carried on by any entity licensed under the Regulatory Laws for 7 years from 14 June 2017
• Mr Scullion must not perform any function in relation to business carried on by any entity licensed under the Regulatory Laws for 5 years from 14 June 2017
• Mr De Carteret must not perform any function in relation to business carried on by any entity licensed under the Regulatory Laws for 3 years and 6 months from 14 June 2017
• Mr Montague, Mr Scullion and Mr De Carteret must pay the financial penalties imposed on them of £35,000, £21,000 and £10,500 respectively
• Mr Montague, Mr Scullion and Mr De Carteret are subject to disapplication of the section 3(1)(g) Fiduciaries Law exemption for the stated periods, meaning they cannot rely on that exemption during those periods

Applies to

controlled investment business licensees, collective investment scheme operators, insurance intermediaries, directors and controllers of licensed entities, fiduciary businesses relying on the section 3(1)(g) exemption

Deadlines

• 14 June 2017: Date the Commission decided to impose the financial penalties, prohibition orders and disapplication of exemption, and issued this public statement
• 7 years from 14 June 2017: Duration of Mr Montague's prohibition from performing functions for licensed entities and disapplication of the section 3(1)(g) Fiduciaries Law exemption
• 5 years from 14 June 2017: Duration of Mr Scullion's prohibition from performing functions for licensed entities and disapplication of the section 3(1)(g) Fiduciaries Law exemption
• 3 years and 6 months from 14 June 2017: Duration of Mr De Carteret's prohibition from performing functions for licensed entities and disapplication of the section 3(1)(g) Fiduciaries Law exemption