Former Keydata Investment Services compliance officer and operations director Peter Johnson has withdrawn his appeal to the Upper Tribunal, and so the ban and censure the Financial Conduct Authority (FCA) wished to impose on him has now come into effect.
Mr Johnson is prohibited from carrying out any regulated activity, and had it not been for his adverse financial situation, he would also have been fined £200,000.
His most serious act of wrongdoing was to mislead the FCA in formal interviews, when he stated that he was not aware of any liquidity problems with the Keydata portfolio.
The firm’s directors also failed to make advisers selling the products aware of the associated investment risks; and did not act on warnings that the firm’s financial promotions were inadequate and misleading. Again there were issues over the way the firm described the risks of the investments; and in addition, the firm became aware in December 2008 that their products were unlikely to qualify for ISA status, but ignored these warnings and continued to promote them as being available within the ISA wrapper.
As compliance officer, Mr Johnson was ultimately responsible for signing off the firm’s promotional material.
The FCA believes that he breached Principle 1 of the Statements of Principle for Approved Persons, by failing to act with integrity in carrying out his controlled functions; and Statement of Principle 4 by failing to be open and cooperative in his dealings with the FCA.
Keydata was an investment firm that offered complex structured investment products that were underpinned by investment in bonds issued by Luxembourg special purpose vehicles. The firm entered administration in June 2009, landing authorised firms with a £326 million interim levy from the Financial Services Compensation Scheme, which had to take over the task of compensating investors who had lost money.
The Keydata saga began in October 2011 when law firm Herbert Smith Freehills launched legal action against Keydata’s advisers, seeking to recover £75 million in compensation for clients who were allegedly sold unsuitable investments.
In November 2014, well known financial advisory firm Chase de Vere was fined £560,000 by the FCA for mis-selling Keydata investments. John Joseph Financial Services was fined £20,000 in September 2015 over the same issue.
The Tribunal proceedings continue in respect of former Keydata CEO Stewart Ford and sales director Mark Owen. The FCA wants to ban both men and fine them £75 million and £4 million respectively. Mr Ford has also launched legal proceedings against the FCA, saying the regulator abused its powers by forcing Keydata into administration.
Former finance director Craig McNeil accepted his ban and £350,000 fine in September 2015.
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