§ Dr. McDonaldasked the Secretary of State for Trade and Industry (1) if, following a review by his Department, any licences to deal in securities have been revoked;
(2) how many applications to become licensed dealers have been approved and how many rejected in each year since 1979.
§ Mr. FletcherThe number of licences granted under section 3 of the Prevention of Fraud (Investments) Act 1958 in each year since 1979—excluding renewals—is as follows:
Principal's licences Representative's licences 1979 37 160 1980 56 205 1981 70 155 1982 88 280 1983 225 506 *1984 176 691 * To date. From 1 January 1983 to date there have been 21 refusals or revocations of principal's licences. This figure does not include licences which holders have allowed to lapse or applications rejected as incomplete. Information about earlier years and representative licences is not readily available and could be provided only at disproportionate cost.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry if any of the self-regulatory organisations of dealers in securities have applied for a block deal.
§ Mr. FletcherThe law empowers me to grant an order of recognition only to an individual association of dealers in securities or stock exchange.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry if he is satisfied with the stringency of the requirements for members of the self-regulatory bodies whose members deal in securities.
§ Mr. FletcherI am generally satisfied with the standards maintained by these bodies. Although there have been some complaints against their members, they are few and far between.
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§ Dr. McDonaldasked the Secretary of State for Trade and Industry (1) if he will list all the self-regulatory bodies whose members are dealers in securities exempted from his Department's regulations for licensed dealers;
(2) if he will list all the members of all the self-regulatory bodies whose members are dealers in securities exempted from his Department's regulations for licensed dealers.
§ Mr. FletcherThe associations of dealers in securities recognised under section 15 of the Prevention of Fraud (Investments) Act are listed, as is the Stock Exchange, in my Department's publication "Dealers in Securities and Authorised Unit Trust Schemes, 1984". This volume also lists the members of five of the nine bodies in question. The membership lists of the other four are excluded on space and cost grounds, but are available for inspection.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry whether the vetting by his Department of applications to become licenced dealers includes checking on the applicants and their associates with comparable agencies in the United States of America and Europe.
§ Mr. FletcherYes. If the applicant has carried on business abroad or persons (legal or natural) who are based abroad are likely to be able to exercise a material influence over the applicant's business.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry how many applications to become licensed dealers have been received by his Department in each year since 1979.
§ Mr. FletcherThe following numbers of applications for licences to deal in securities have been received:
Principals licence applications Representative licence applications 1983 247 591 1984 (to date) 137 448 Figures for earlier years are not readily available and could be provided only at disproportionate cost.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry (1) what is the average age of the inspectors in his Department engaged in vetting applications to become licensed dealers;
(2) how many inspectors in his Department are engaged in vetting applications to set up as licensed dealers.
§ Mr. FletcherThere are eleven staff directly engaged in the vetting of applications for licences to deal in securities. Their mean average age is 31.9 years.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry how many complaints have been received, on average, about any one licensed dealer by his Department in each year since 1979.
§ Mr. FletcherThe great majority of licensed dealer firms do not give rise to any complaints to my Department. In 1983, 34 complaints were received about 12 firms. In 1984 to date there have been 50 complaints about 11 firms. Figures about complaints received in earlier years are not readily available and could be provided only at disproportionate cost.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry how often licences to deal in securities are reviewed.
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§ Mr. FletcherEach year when they fall due for renewal. Otherwise, whenever there is any complaint or change in circumstances (eg changes of directors) which might call into question the continued fitness of the licence holder.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry if he will list the criteria which must be met by an applicant for a licence to deal in shares.
§ Mr. FletcherUnder the Prevention of Fraud (Investments) Act 1958 a licence must be granted unless I have reason to suppose that the applicant is not a fit and proper person to hold a licence. Section 5(2) of the Act sets out the matters to which I can have regard in forming such a view.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry what information he has about the regulations governing brokers and dealers in the United States of America; and how they compare with the regulations governing licensed dealers in shares in the United Kingdom.
§ Mr. FletcherMy Department has copies of the regulations in question. They have much in common with the United Kingdom rules and regulations governing licensed dealers.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry if he is satisfied with the stringency of his Department's regulations concerning licensed dealers in shares: and if he will make a statement.
§ Mr. FletcherYes. The Licensed Dealers (Conduct of Business) Rules and the Dealers in Securities (Licensing Regulations) were radically revised last year. I have no reason to suppose that, within the limits of my present powers, the rules and regulations are wanting in stringency.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry how many licensed dealers have been investigated under the Prevention of Fraud (Investments) Act 1958 in each year since 1979.
§ Mr. FletcherSince 1980 the following numbers of licensed dealers have been investigated under Section 109 of the Companies Act 1967:
Number 1980 2 1981 3 1982 1 1983 6 1984* 1 * to date The figure for 1979 is not readily available and could only be obtained at disproportionate cost.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry if he will give the figures for (a) bankruptcies and (b) liquidations of licensed dealers in shares for each year since 1979.
§ Mr. FletcherI regret that this information is not readily available and could be provided only at disproportionate cost. A specific obligation on licensed dealers to notify my Department of bankruptcy and liquidation proceedings was introduced in the Dealers in 11W Securities (Licensing) Regulations 1983. There is, however, no obligation to notify this information after a licence has been revoked or has lapsed.
§ Dr. McDonaldasked the Secretary of State for Trade and Industry (1) if the criteria for membership of self-regulatory bodies dealing in securities is equivalent to becoming a licensed dealer under his Department's regulations;
(2) what are the criteria for becoming a self-regulatory body whose members are dealers in securities, exempted from his Department's regulations for licensed dealers;
(3) if the membership requirements of the self-regulatory bodies whose members deal in securities exempt those members from his Department's regulations.
§ Mr. FletcherThe exemption of members of a body depends upon the body being recognised under section 15 of the Prevention of Fraud (Investments) Act. There are no explicit statutory criteria for recognition. Since it involves, in effect, the delegation of the Secretary of State's own regulatory responsibilities the criteria employed amount essentially, to membership requirements, conduct of business rules, and enforcement affording to standard of investor protection at least equivalent, overall, to that which we seek to maintain under the statutory system for licensed dealers.