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The 13 names on the FCA's 2017 naughty list

Its been a busy year for the FCA: who's getting coal in their stocking?

This year has seen some big changes for the Financial Conduct Authority (FCA), as it prepares for some major new rules coming into effect in 2018.

However, the regulator has not been too busy to levy £229.5 million in fines, 10 times larger than the total issued in 2016 - although it remains a small fraction of the total issued during the peak of the Libor and FX bank scandals.  

So far this year, 13 companies and individuals have been fined by the regulator. Read on to find out who and and how much

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This year has seen some big changes for the Financial Conduct Authority (FCA), as it prepares for some major new rules coming into effect in 2018.

However, the regulator has not been too busy to levy £229.5 million in fines, 10 times larger than the total issued in 2016 - although it remains a small fraction of the total issued during the peak of the Libor and FX bank scandals.  

So far this year, 13 companies and individuals have been fined by the regulator. Read on to find out who and and how much

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Deutsche Bank AG

31/1/2017

Amount: £163,076,224

Deutsche Bank was fined $630 million (£504 million) in relation to a billion dollar Russian money laundering plan.

The fine was levied on the bank by UK and US regulators. Clients moved $10 billion out of Russia using shares bought and sold through the bank's Moscow, London and New York offices, according to the BBC.

Deutsche missed ‘numerous opportunities’ to spot and stop the scheme, regulators said.

 

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Christopher Niehaus     

30/3/2017           

£37,198

The Financial Conduct Authority (FCA) fined a former investment banker £37,198 for sharing confidential client information over WhatsApp.

The FCA found that Christopher Niehaus, who was a managing director in the investment banking division at Jefferies International, failed to act with due skill, care and diligence. 

On a number of occasions between 24 January and 16 May 2016, Niehaus shared confidential client information with a personal acquaintance, and a friend who was also a client of the firm. In one instance, the information was about a competitor. 

The details included the identity of the client, information relating to the client mandate and the fee Jefferies would charge for their role in the transaction. 

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Niall O’Kelly       

07/04/2017        

£11,900

The Financial Conduct Authority has fined two individuals a total of £116,900 for market abuse. 

Two former employees of Worldspreads Limited (WSL), which operated a spread betting business that collapsed in 2012, have been fined and permanently banned from performing any related regulated activity. 

The regulator found that O'Kelly helped manage an undisclosed hedging strategy at the company using fake trading accounts and actual client accounts without being authorised to do so. As a result, he artifically inflated assets on the Worldspreads Group's balance sheet.

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Lukhvir Thind    

07/04/2017        

£105,000

Also at Worldspreads was Lukhvir Thind, who was fined £105,000 after he knowingly falsified critical information in the company's annual accounts for 2010 and 2011, hiding the material shortfalls in WSL's client money position. 

The misstatements amounted to £15.9 million by 31 March 2011. 

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David Samuel Watters  

14/07/2017        

£75,000

A compliance specialist was fined £75,000 after around 500 investors were moved from defined benefit to defined contribution pension schemes without considering if this was in their best interests.

The Financial Conduct Authority found that David Watters had failed to exercise due skill, care and diligence in his role of compliance officer responsible for transferring £12.7 million in client funds.

Gary Dixon, a partner at compliance consultancy MomentumGRC, described the decision to single out Watters, rather than fining the business as at a corporate level, as a 'game changer' for the way oversight staff are regulated. 

'The clear message to regulated firms is that compliance needs to be a boardroom issue and they can’t simply dump it on one person and forget about it,' he added. 

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Charles Palmer 

19/09/2017        

£86,691

The Financial Conduct Authority's (FCA) decision to fine and ban the former boss of network Financial Limited and Investments was upheld by the Upper Tribunal. 

The FCA has fined Charles Palmer, who was the majority shareholder and CEO of Standard Financial Group, £86,691 over risk management failures. 

The regulator revealed its intention to ban him in September 2015, but Palmer appealed in the Upper Tribunal. 

The tribunal has agreed with the City watchdog that Palmer 'failed to act with due skill, care and diligence in carrying out his role of director'. 

Following the decision of the tribunal, which was made after a hearing in February, Palmer can take the matter to the Court of Appeal. 

 

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Colette Chiesa         

12/10/2017        

£50,000

A husband and wife team of investment advisers was banned by the regulator for hiding huge sums of wealth from investigators probing the winding down of their previously bankrupt firm.

Colette Chiesa was additionally fined £50,000 over her attempt to mislead investigators from the Financial Conduct Authority, while they investigated her and her husband John Chiesa.

The FCA took action following the closure of their firm Westwood Independent Financial Planners, which in 2011 was fined £100,000 over multiple failings in how it sold traded endowment policies.   

The couple continued to hold ‘significant liabilities’ under the terms of the compensation ordered paid by the Financial Ombudsman Service. But the FCA found they had made ‘inadequate, incomplete and misleading’ disclosures of their assets in order to avoid handing over their cash.

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Rio Tinto       

17/10/2017        

£27,385,400

regulators have charged Rio Tinto and two of the mining giant’s former executives with fraud, alleging they tried to cover up a failed investment in Mozambique six years ago.

The company vigorously denies the allegations by the Securities and Exchange Commission (SEC) against itself and its former chief executive Tom Albanese and chief financial officer Guy Elliott but has agreed to pay a record £27 million fine to the UK’s Financial Conduct Authority.

This is the largest penalty of its kind imposed by the City watchdog and reflects the seriousness of the breach by Rio, which failed to promptly disclose to investors the fall in value of the mining operations it bought in Mozambique for $3.7 billion in August 2011 and which it later sold for $50 million.

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Merrill Lynch

23/10/2017        

£34,524,000

The Financial Conduct Authority (FCA) has fined Merrill Lynch International £34.5 million for failing to report transactions. 

The bank has been accused of failing to report 68.5 million exchange traded derivative transactions between 12 February 2014 and 6 February 2016. 

Merrill Lynch International (MLI) was the subject of two earlier and related transaction reporting cases, the FCA said. 

Back in 2015 the firm was fined £13.3 million for incorrectly reporting over 35 million transactions and failing to report another 121,387 transactions between 2007 and 2014. 

In 2006, the company also received a fine of £150,000 by the Financial Services Authority.

 

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Paul Axel Walter              

22/11/2017        

£60,090

The Financial Conduct Authority has fined a former Bank of America Merrill Lynch bond trader £60,000 for market abuse.

The regulator found that Paul Walter created a false and misleading impression of supply and demand in the market for Dutch State Loans (DSL) on 12 occasions in July and August 2014.

FCA executive director of enforcement and market oversight Mark Steward said: ‘Market manipulation undermines market integrity and confidence.  The FCA will be vigilant in detecting abusive practices and will take robust action to protect issuers and participants from all over the world from the harm caused by such abuse.’  

Walter entered a series of quotes that became the best bids on Brokertec, the electronic trading platform, giving the impression that he was a buyer in a DSL on 11 occasions. Other market participants who were tracking his quotes with algorithms followed him in response and raised their bids.  

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Bluefin Insurance Services          

6/12/2017           

£4,023,800

The Financial Conduct Authority fined insurance broker Bluefin Insurance Services Limited £4 million for having inadequate systems and controls.

In addition, the regulator has said that Bluefin failed to provide information to its customers about its independence in a way that was clear, fair and not misleading. 

The company, which was wholly owned by Axa UK during the period between 9 March 2011 and 31 December 2014, failed to implement 'adequate systems and controls to manage the conflict that arose' from its ownership. 

The City watchdog said that the company's independence was compromised by its culture which promoted business strategy over treating customers fairly. At the firm there was a policy that focused on increasing business placed with Axa. 

.

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Tejoori Limited 

14/12/2017        

£70,000

The Financial Conduct Authority (FCA) has flexed powers granted to it by last year’s Markets Abuse Regulation (MAR) for the first time, issuing a £70,000 fine to an investment company for late disclosure.

Tejoori (TJlu) was listed on the Alternative Investment Marekt (AIM) from 2006 until its formal wind-up last week and at the time of the failure held just two investments. One of these, German biogas business Bekon AG, was held at a reported value of $3.5 million (£2.6 million) when it was purchased last year.

The managers of Tejoori failed to disclose that they had handed over the stake for ‘no initial consideration’ and only the future prospect of payment ‘materially below’ its earlier book value to a third party.

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