Financial Conduct Authority
Upper Tribunal upholds the FCA decision to fine and ban former Keydata executives
The Upper Tribunal has today upheld the Financial Conduct Authority’s (FCA) decision to fine and ban Stewart Ford and Mark Owen, the former CEO and sales director respectively of Keydata Investment Services Ltd (Keydata).
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 Tribunal has directed the FCA to fine Mr Ford £76 million 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. However, 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 3 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 thanks the assistance provided by the SEC (United States), CSSF (Luxembourg), GFSC (Guernsey), FMA (Liechtenstein), Cayman Islands Monetary Authority, and the Central Bank of Ireland in the investigation of this matter.
Notes for Editors
- Learn more about the Upper Tribunal’s judgment (link is external).
- The FCA has previously taken enforcement action against Craig McNeil, Keydata’s former finance director and Peter Johnson, Keydata’s former compliance officer. The Final Notices can be found at: Final Notice for Craig McNeil and Final Notice for Peter Johnson.
- Between 2005 and 2009 Keydata provided over £475 million of SLS- and Lifemark-backed retail products. In June 2009, Keydata was placed into administration on the FCA’s application, on the basis that Keydata was insolvent. Keydata was dissolved on 2 July 2014.
- In December 2014, the FCA published a factsheet explaining what traded life policy investments (also referred to as 'life settlement policies') are and the marketing restriction rules applying to their distribution to retail investors in the UK. The paper confirmed that firms should not promote traded life policy investments to ordinary retail clients.
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has 3 operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.
Latest News from
Financial Conduct Authority
FCA proposes changes to facilitate investment in patient capital14/12/2018 10:25:00
The Financial Conduct Authority (FCA) recently (12 December 2018) proposed changes to further enable retail investors to invest in patient capital through unit-linked funds. The FCA is also exploring how UK authorised funds can be used to invest in patient capital.
FCA proposes permanent measures for retail CFDs and binary options10/12/2018 16:48:00
The Financial Conduct Authority (FCA) is proposing rules to address harm to retail consumers from the sale of certain complex derivative products with the publication of two consultation papers.
Manraj Virdee pleads guilty to illegally operating an investment scheme and fraud07/12/2018 10:25:00
In a case brought by the Financial Conduct Authority (FCA), Manraj Virdee recently (07 December 2018) pleaded guilty at Southwark Crown Court to four charges encompassing illegal operation of an unauthorised investment scheme, misleading consumers, and two related counts of fraud and will be sentenced at a date to be confirmed in due course.
FCA publishes findings on long-term mortgage arrears06/12/2018 14:33:00
Today the Financial Conduct Authority (FCA) published findings on how mortgage lenders treat customers who have long-term mortgage arrears and provide forbearance to affected customers.
ScamSmart prompts tens of thousands of pension holders to seek information05/12/2018 12:05:00
The number of people seeking information about pension scams has soared since the launch of the first joint campaign by the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) this summer.
FCA publishes Decision Notice against former CEO of Sonali Bank (UK) Ltd for AML failings04/12/2018 16:10:00
The Financial Conduct Authority (FCA) has today published a Decision Notice in respect of Mohammad Ataur Rahman Prodhan, the former Chief Executive Officer of Sonali Bank (UK) Limited (SBUK), fining him £76,400.
Mark Starling sentenced to 5 years’ imprisonment in FCA prosecution of £3m investment fraud30/11/2018 10:20:00
Mark Barry Starling, aged 57 of Farnham, Surrey, was yesterday sentenced at Southwark Crown Court to 5 years’ imprisonment for defrauding investors of just under £3 million in relation to unauthorised investment schemes he operated between 2008 and 2017.
FCA launches further consultations ahead of the UK’s exit from the EU26/11/2018 10:25:00
The Financial Conduct Authority (FCA) recently (23 November 2018) published a further consultation on its approach to the UK’s exit from the EU. The recent paper sets out additional proposals to prepare for the possibility the UK leaves the European Union on 29 March 2019 without an implementation period.
FCA proposes introduction of price cap on rent-to-own firms to protect vulnerable consumers from high costs22/11/2018 11:25:00
The Financial Conduct Authority today proposed to introduce a price cap on the rent-to-own (RTO) sector. The cap, subject to consultation, will come into force on 1 April 2019 providing protection for some of the most financially vulnerable people in the UK. Once in force, the changes are expected to save consumers up to £22.7m per year.