The FSA has banned the former CEO and CFO of a collapsed hedge fund from the securities business and imposed significant fines on each as a result of their manipulative and deceptive conduct as the fund collapsed. Michael Weiger Visser was the CEO and Oluwole Modupe Fagbule the FCO of Mercurius Capital Management Limited. Mercurius managed the hedge fund Mercurius International Fund. From July 2006 through January 2008 the fund had approximately 20 investors and € 35 million under management. It collapsed and was placed in voluntary liquidation on January 11, 2008. Investors have not recovered anything.

Mr. Visser deliberately mislead investors by concealing the true performance of the fund thereby ensuring that others would continue to invest in it. Specifically, he breached key investment restrictions which were designed to limit the risk of the fund. As a result the holdings of the fund were concentrated in a few illiquid stocks. Investors were not aware of the poor performance of the fund because Mr. Visser manipulated its NAV by directing it to enter into a series of fictitious trades.

Mr. Fagbulu was responsible for compliance and oversight at Mercurius. According to the findings from The Upper Tribunal, he approved investor communications which contained false information and omitted other relevant information. He also failed to ensure that the investment limitations of the fund were followed and he assisted in the manipulation of the NAV by entering into detrimental financing transactions.

As a result of this conduct the Tribunal directed the FSA to impose a fine on Mr. Visser of £2 million and on Mr. Fagbula of £100,000. Both men were banned from the financial services industry. The Tribunal had determined that Mr. Fagbula’s conduct merited a fine of £350,000 but reduced it because of financial hardship.

Program: Current Trends in FCPA Enforcement, August 17, 2011, Live in Palo Alto, CA, and webcast nationally. The program link is here.