The regulator said this morning that Mothahir Miah had abused clients’ trust in a deliberate manner and banned him from the industry for “failing to act with honesty and integrity”.
He escaped a £198,600 fine by settling early but must still pay £139,000.
His ban and fine follows the FCA fining Aviva Investors £17.6 million for ‘failings’ on 24 February.
The FCA said Mr Miah had made early admissions and expressed remorse, meaning that it is “minded to revoke Mr Miah’s ban from performing any regulated activity after five years upon his application”.
Mark Steward, director of enforcement at the FCA, said: “Mr Miah abused the trust given to him by his clients in a very clear and deliberate way. It is vital that Approved Persons operate with honesty and integrity at all times. Mr Miah did not.
“We have taken into account that Mr Miah admitted his misconduct at a very early stage to both Aviva Investors and the FCA and showed remorse for his actions.”
An FCA statement said: “At Aviva Investors Mr Miah had authority to trade on behalf of hedge and long-only funds. Between January 2010 and October 2012, Mr Miah exploited weaknesses in the trading systems and controls at Aviva Investors in order to delay the booking and allocation of trades.
“This meant Mr Miah was able to assess the performance of a trade during the day and allocate trades which had benefitted from favourable price movements to hedge funds that paid performance fees and trades that had not benefited to certain long-only funds that paid lower or no performance fees. This abusive practice is known as “cherry picking”.
The FCA explained that Aviva Investors’ policies required Mr Miah to book details of each trade, including the amounts to be allocated to specified funds, into an online system within 15 minutes of trading on behalf of long-only funds.
The FCA said: “When trading on behalf of a hedge fund, Mr Miah was required to report the details of the trade within an hour of the trade being executed.
“The FCA found that Mr Miah deliberately delayed the booking and allocating of trades on a regular basis by several hours. This allowed him to cherry pick on numerous occasions.
“Mr Miah knew that cherry picking was wrong, but was motivated by a desire to prove his trading ability to his colleagues and increase his prospects of being promoted. This is because the culture within the Fixed Income business was heavily focused on performance and promotions tended to be based on reported investment performance. However, neither Mr Miah’s motivation nor the culture in the business excuse his cherry picking in any way.”