The option of striking off a solicitor following the emergence of his links to suspicious investment schemes has been rejected by the Solicitors Disciplinary Tribunal.
Robert Sedgwick, who had agreed with the sanction, admitted to the involvement of both himself and his firm in four ‘dubious’ investment schemes.
However, the SDT disagreed with the penalty from the Solicitors Regulation Authority (SRA), stating that there was insufficient information for it to be content the decision was both proportionate and appropriate.
It went on to highlight that the SRA had not purported any allegation of fraud or dishonesty and that it was unclear how the decision had been reached given the lack of detail surrounding the outcome.
The regulator along with Sedgwick was asked to re-submit the decision, and following a one-day hearing, agreed on a suspension lasting 12 months.
During the hearing, it emerged that the investigation from the SRA had started two years subsequent to the initial complaint into Sedgwick and his firm being made. The claim was in relation to investments paid to the firm which were then passed to clients who claimed to be a part of a carbon credits trading scheme.
The regulator stated that solicitors should not act as an ‘escrow agent’, or person that holds property in trust on behalf of a third party, claiming that this was well established. As a result, it said that any third party requesting such a service should be treated as suspicious.
In relation to this point, both the SRA and the Financial Services Authority had issued warning notices, including one which specifically related to carbon credit trading where the latter was concerned. This highlighted the high-pressure sales tactics from some firms and warned that vulnerable clients were often being targeted.
Attached to the outcome of the hearing, a statement of mitigation included a declaration from Sedgwick, in which he suggested that he had not been aware of his client’s involvement in the schemes.
He also denied any awareness of the warning issued by the FSA, as well as adding that some of the investments into carbon credit schemes had been made by trustees of self-invested personal pensions. As such they “were firms regulated by the FSA and they raised no concerns as to the validity of the investments.”
The statement of mitigation also highlighted concern expressed by the tribunal in relation to the SRA, particularly in relation to the short notice of some applications.
It read: “This was disruptive to the tribunal’s timetable, as they had to be considered at very short notice while dealing with other cases.” It went on to say the regulators’s counsel “apologised for the lateness, and recognised the concerns that were being expressed and indicated he would feed this back.”
