The Financial Services Authority (FSA) has revealed that Arch Financial Products chief executive Robin Farrell reaped a £490,000 profit by selling shares in Arch's parent company to the Arch Cru funds.
In its decision notice on Arch, the FSA said that the deal, between the Channel Islands-listed cells that make up the Arch Cru funds, caused a 'clear conflict of interest', and that crucial details were kept from non-Arch directors of the cells.
'It was not stated in the business plan presented to the non Arch Guernsey cell directors by Farrell and [Arch compliance officer] Addison that Farrell would be making a personal gain from the transactions and that the Guernsey cells' investment funds would not be going into [Arch FP parent] Arch Group, but directly to Farrell,' it said.
The FSA said that the cells' £500,121 purchase of Farrell's shares was based on a share price of £96.81, recommended by Farrell and valuing Arch Group at approximately £17.4 million. 'No independent valuation was sought by Arch FP despite the clear conflict of interest between the interests of AFP, Farrell and the Guernsey cells,' the FSA said.
The cells also made a further £510,000 investment into newly-issued Arch Group shares.