The Upper Tribunal agreed with the FCA’s decision to fine and ban Stewart Ford and Mark Owen, the former CEO and sales director respectively of Keydata Investment Services Ltd.
The Tribunal ruled that both had acted “without integrity” and had failed to deal with the FCA’s predecessor the Financial Services Authority in an open and cooperative way.
The hearing directed the FCA to fine Mr Ford £76m and Mr Owen £3,240,787 and agreed that both should be prohibited from performing any role in regulated financial services.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Keydata sold complex structured products backed by life settlements based on misleading brochures and without properly assessing whether the products could meet what was promised.
“The Tribunal found that Mr Ford bears primary responsibility for this, deliberately setting aside his regulatory responsibilities driven by his desire to maximise and preserve financial gain for himself.
“Those who commit such misconduct have no place in the financial services industry.”
Keydata produced and distributed structured products designed for retail consumers.
In 2005, Keydata began marketing products based on bonds issued by a Luxembourg-based company called SLS Capital SA (SLS) and underpinned by US life settlement policies.
It did so without conducting adequate due diligence and using misleading brochures.
In 2006, Mr Ford replicated the SLS structure using a company, Lifemark SA (Lifemark), beneficially owned by himself.
As a result, over the following three years, he was able to extract fees from the structure totalling some £73.3 million.
The Tribunal found that these payments were received either for “no services whatsoever” or “for services unrelated to [the Lifemark] Products” and “could not be justified commercially”.
The Tribunal found that Mr Owen received £2,540,787 in undisclosed commissions from Mr Ford.
Although both Mr Ford and Mr Owen claimed these payments to have been unrelated loans, the Tribunal concluded that this was a “fabrication” which “in itself, both for Mr Ford and Mr Owen, displays a lack of integrity”.
Despite being made aware of various concerns about the SLS and Lifemark products, Mr Ford and Mr Owen failed to disclose these to investors, IFAs or the Authority.
The Tribunal considered “a constant theme is the deliberate and calculated concealment by Mr Ford of material information, both as to the fees extracted by Mr Ford, and as to the serious issues that arose with respect to both the SLS and Lifemark Products.”
The Tribunal found that both Mr Ford and Mr Owen had made false statements to the Authority in compelled interviews, had failed to instruct Keydata’s compliance officer not to mislead the Authority and had failed to disclose, in Mr Ford’s case, his true involvement with Lifemark and, in Mr Owen’s case, the commissions received by him.
The FCA thanked foreign organisations for assistance they provided, including the SEC (United States), CSSF (Luxembourg), GFSC (Guernsey), FMA (Liechtenstein), Cayman Islands Monetary Authority and the Central Bank of Ireland.