A hedge fund's portfolio manager, and approved person, has been prohibited and fined £35,000 for lack of honesty and integrity in breach of Statement of Principle 1 due to his deliberate mismarking of trading positions to conceal losses and avoid losing his job in accordance with a stop loss procedure. This resulted in the fund being overvalued by $8.6m. The FSA has indicated that it is minded to revoke the ban after two years in the absence of new evidence that he is not fit and proper (FSA Final Notice - Loic Albert Antoine Montserret, (PDF 172KB), 28 April 2009). Both the FSA’s press release and Final Notice state that the Final Notice makes no criticism of his former employer, the fund. Although the fund’s internal valuation procedure allowed traders to adjust the valuation parameters for their positions, all the fund’s positions were subject to an independent month-end valuation on which customers typically relied when making investment decisions.
Since the manager’s actions were rectified prior to the month-end valuation, there was no evidence that customers had been disadvantaged.
A mortgage adviser has been prohibited for certifying client identity documents accompanying fraudulent mortgage applications as true copies without seeing the originals or meeting the clients; submitting mortgage applications which he must have suspected might have been supported by false information; carrying out controlled functions without being approved and arranging for his father to be named as the approved person (FSA Final Notice - Mr Zia Chowdhury, (PDF 100KB), 8 April 2009).