The FSA today issued a Final Notice against ActivTrades Plc, a foreign exchange broker, that has been fined £85,754 for CASS breaches committed even after the high profile run of CASS cases in June last year.
ActivTrades is a broker specialising in foreign exchange, contracts for difference and futures. It has been authorised and regulated since October 2005. During the ‘relevant period’, between 14 April 2009 and 2 September 2010, the amount held by ActivTrades as client money ranged between £3.4 million and £23.6 million and averaged £12.2 million.
The Final Notice refers to a ‘Dear Compliance Officer’ letter of March 2009, which reminded firms to make adequate arrangements to protect client money and assets, implying this was the first public statement by the FSA that it was prioritising CASS compliance after Lehman’s collapse in September 2008.
The implicit criticism of ActivTrades is that it failed to put its house in order thereafter. What seems even more surprising is the apparent failure to react to the five Final Notices relating to CASS breaches in June 2010, including the record fine for JP Morgan Securities (£33.32m).
The Final Notice confirms some emerging themes. As I also noted in January, the ’1% rule’ has again been expressly applied in setting the fine. ActivTrades was fined £122k (pre discount) which represents 1% of the average client monies at risk (£12.2m). The FSA has also highlighted its main CASS concern: ActivTrades’ co-mingling of client money with its own, which created an insolvency risk.