FIN.

FCA bans individuals for mistreatment of customer funds

The FCA has taken action against 3 individuals who were involved in running SVS Securities Plc, a discretionary fund manager.

SVS used a complex business model intended to maximise the flow of customer funds into high-risk illiquid bonds, which were operated by directors of SVS. The model involved inducements to SVS and unauthorised introducers with undisclosed commissions of up to 12% of customers’ investments. 879 customers paid in just over £69 million – the bonds into which they were invested have since defaulted and customers are likely to only receive a fraction of their investment back.

The FCA said that the model created systemic conflicts of interest and inappropriately prioritised income to SVS over the best interests of customers. It has therefore decided to fine Kulvir Virk (former CEO) £215,500, Demetrious Hadjigeorgiou (former finance director, then CEO) £84,600, and David Stephen (head of compliance) £52,100. The FCA has also banned Mr Virk from working in financial services, and banned Mr Hadjigeorgiou and Mr Stephen from holder senior management roles.

Lucy Hadrill