FCA $116 Million Fine for Ex-CEO Outstrips Libor Penalties

Updated on

The U.K. financial regulator fined the former chief executive officer of Keydata Investment Services Ltd. 75 million pounds ($116 million), in a record penalty that outstrips some issued over the Libor scandal.

The U.K. Financial Conduct Authority levied the fine for mis-selling against Stewart Ford Tuesday, along with a 4 million-pound penalty for the company’s former sales director, Mark Owen, and a 200,000 pound sanction for former compliance officer Peter Johnson. All three have filed appeals.

Keydata, an investment company with 2.8 billion pounds under management, went into administration in 2009 and was dissolved last year. The FCA said Ford made 72.4 million pounds in fees and commissions from sales of investment products, which were related to life insurance policies.

Ford’s fine, if upheld, would dwarf the FCA’s $9.6 million penalty imposed on Rameshkumar Goenka, a Dubai-based investor, for manipulating stocks in London, the regulator’s biggest against an individual to date. It would also outstrip a number of sanctions against institutions over manipulation of the London interbank offered rate, including a 59.5 million-pound penalty paid by Barclays Plc in 2012.

Deterrent Effect

“This represents a condign punishment, where you have an obvious loser because of another person’s behavior,” said Michael Drury, a London lawyer not involved in the case. “If the FCA is going to start issuing bigger fines though, it makes sense for the person actually to be able to pay them if they are to have the desired deterrent effect.”

The three men “failed to act with integrity” and “misled” the regulator on a number of occasions in relation to the performance of the investment products, the FCA said. The promotion of the products to investors was also unclear and incorrect, the FCA said. At least 330 million pounds has been paid out in compensation to investors.

Harvey Knight, a London lawyer who used to represent Ford, said he no longer worked on the Keydata case and wasn’t aware of a new attorney. The FCA said the individuals are representing themselves and couldn’t provide contact information for them.

(Updates in fifth paragraph with lawyer comment.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE