Legal Services

Question 1

“Takeover” exclusion

Answer 1

Under the takeover exclusion, a solicitor can deal as an agent, arrange, or advise with respect to a client who is buying or selling 50% or more of the voting shares of a company.

Question 2

A solicitor instructs a client about purchasing a house. The client is financing the purchase partly by selling shares, and the solicitor recommended that the client speak to a stockbroker about which shares to sell. The stockbroker gave the solicitor an introduction fee of £100. The client takes the stockbroker’s advice and the solicitor deals with the paperwork for the sale of the shares.

Has the solicitor breached the general prohibition against carrying on a regulated activity?

Answer 2

YES

Formula for this type of question:
Specified Activity + Specified Investment + No Exclusion= Carrying on of regulated activity

Here, arranging is a specified activity and shares are a specified investment.

While “acting through authorised persons” is an exclusion, it is not available if the solicitor received payment from the authorised person (stockbroker). As the stockbroker paid the solicitor an introduction fee of £100, this exclusion will not be available.

Question 3

Can a firm not regulated by the FCA do the following?

1) Arranging for a client to purchase Premium Bonds.

2) Safeguarding a client’s portfolio of shares.

3) Contracting for a client to purchase a funeral plan.

4) Managing a client’s debenture.

5) Advising a client on payments into a pension scheme.

Answer 3

Only the first one: Arranging for a client to purchase Premium Bonds. Premium bonds are not a specified investment.

Specified Activity + Specified Investment + No Exclusion= Breach

Specified Activity (ADAMS):
- Advising
- Dealing as agent
- Arranging
- Managing
- Safeguarding

Specified Investments (FM DIPS)
- Funeral plans
- Mortgages
- Debentures
- Insurance contracts
- Pension schemes
- Shares in a company

Question 4

When can a freelance solicitor can carry out reserved legal activities without being authorised as a sole practitioner by the SRA?

Answer 4

• They must have three years’ post-qualification experience
• They must must take out and maintain adequate and appropriate insurance,
• They must not hold client money, and
• They must notify the SRA that they are acting as a freelance solicitor.

Question 5

A junior solicitor became suspicious of a client’s financial sources and filed a suspicious activity report with her firm’s nominated officer. A few days later, the nominated officer contacted the junior solicitor and assured her that the client was not involved in money laundering. The junior solicitor decided to let the matter rest, despite her misgivings about the client.

The client was arrested for his involvement in organised crime. The National Crime Agency report stated that any cursory look at this client’s background and transactions would make it exceedingly obvious that they were involved in illegal activities.

Can the junior solicitor and/or the nominated officer be charged under money laundering laws?

Answer 5

The nominated officer may be charged with failure to report suspicion of money laundering, but the junior solicitor may not be charged with anything.

The junior solicitor reported her suspicions to the nominated officer. She has therefore fulfilled her obligation and need not undertake further action.