RPP 5-17 RPP 5-17 Settlement Guidance
A settlement is a resolution, between the DFSA and a third party, to agree an outcome resulting from an investigation. A
Personwho is or may be the subject of any form of enforcement action arising out of or during the course of an investigation may enter into settlement discussions with the DFSA.
Settlement discussions are possible at any stage of the enforcement processes, either before or after enforcement action has commenced. When considering whether or not to enter into negotiations for settlement, or a settlement agreement, the DFSA will consider its objectives.
The DFSA generally considers that the early settlement of an investigation advances its objectives in that it may result in, for example, consumers obtaining compensation sooner, the saving of DFSA and industry resources, and the promotion of good business and regulatory practices.
The DFSA's general view is that settlement discussions should take place as early as possible. However, the DFSA will only be able to settle when it is confident it has sufficient understanding of the nature and gravity of the suspected misconduct to make a reasonable assessment of the appropriate outcome.
The DFSA expects settlement discussions to take place on a "without prejudice" basis; namely, that no party to the discussions may subsequently rely upon any admissions or statements made during the course of the settlement discussion or on any document created recording those discussions.
The DFSA will only settle when the agreed terms result in what the DFSA considers to be an effective regulatory outcome.
The DFSA will set clear and reasonable timetables for settlement discussions to ensure they do not unreasonably delay settlement or a regulatory or enforcement outcome.
Settlement in particular circumstances should not be regarded as binding precedent for future settlement discussions.
Factors the DFSA Will Consider When Contemplating Settlement
In deciding whether a proposed settlement is acceptable and in accordance with meeting its objectives, the DFSA will consider a number of factors, including but not limited to:(a) the nature, seriousness and impact of the conduct or suspected contravention the subject of the proposed settlement, and whether the suspected contravention is continuing;(b) whether the
Personis prepared to acknowledge publicly the DFSA's concerns about the conduct or suspected contravention which is the subject of the proposed settlement, and the necessity for protective or corrective action;(c) whether the conduct or suspected contravention which is the subject of the proposed settlement was inadvertent;(d) whether the suspected contravention which is the subject of the proposed settlement was the result of the conduct of one or more individual officers or employees of the Person;(e) the seniority and level of experience of the individuals involved in the conduct and/or suspected contravention which is the subject of the proposed settlement;(f) whether the Personco-operated with the DFSA, including providing complete information about the conduct or suspected contravention which is the subject of the proposed settlement, and any remedial action taken by the Person;(g) whether the settlement will achieve an effective outcome for those (such as consumers or investors) who have been adversely affected by the conduct and/or suspected contravention which is the subject of the proposed settlement;(h) whether the Personis likely to comply with the terms of the settlement;(i) whether the Person'scompliance with the Law and Rules generally will be improved;(j) the disciplinary record and compliance history of the Person;(k) the prospects for a swift resolution of the matter; and(l) whether the settlement promotes general deterrence in making regulated entities in the DIFCaware of the conduct or suspected contravention which is the subject of the proposed settlement, and the consequences arising from engaging in similar conduct or contraventions.
Form of Settlement
Any settlement entered into by the DFSA will be documented in the form of a legally enforceable agreement executed by all parties. Generally, a settlement accepted by the DFSA will be in the form of an
Enforceable Undertaking(EU) is a written promise, made under Article 89, to do or refrain from doing a specified act or acts. It is an alternative mechanism for regulating contraventions of the Law or Rules.
Acceptance of an Enforceable Undertaking
EUmay be given by a Personat any time, either before, during or after an investigation or before the commencement of litigation or proceedings in the Courtor FMTand accepted by the DFSA. The DFSA does not have the power to require a Personto enter into an EU, nor can a Personcompel the DFSA to accept an EU. This does not mean, however, that the DFSA cannot propose an EUto a Person, during the course of settlement negotiations, or provide a Personwith a draft EUto provide guidance as to the terms of an EUthat the DFSA would be willing to accept in the circumstances of the matter.
The DFSA may accept an
EUthat it considers necessary or desirable in pursuit of its objectives. Article 89 does not prescribe a particular structure or format to an EU. However, in the context of an enforcement matter, the DFSA will generally only accept an EUthat:(a) contains an admission or acknowledgement of any contraventions of the Law or Rules or the DFSA concerns;(b) contains undertakings that address the DFSA's concerns; and(c) contains an agreement to make the EUpublic, and an agreement not to make public statements that conflict with the spirit of the EU.
Personoffering an EUto the DFSA may also undertake in the EUto pay the DFSA's costs, including any costs associated with compliance with the EU.
EUwill not take effect until it is formally accepted by the Chief Executiveof the DFSA or his delegate.
Variation or Withdrawal
Once accepted by the DFSA, an
EUcan only be withdrawn or varied with the consent of the DFSA in writing. The DFSA will only consider a request to vary an undertaking if:(a) the variation will not alter the spirit of the original undertaking;(b) compliance with any one or more terms of the undertaking is subsequently found to be impractical or impossible; or(c) there has been a material change in the circumstances which led to the undertaking being given.
Compliance with an EU
If the DFSA considers that a Person has not complied with a term of the
EU, the DFSA may apply to the Courtfor appropriate orders. The DFSA may publicise the fact of the application to the Courtand any subsequent orders of the Court. The DFSA will also seek the costs of the application.