FCA issues prohibition order against HBFS Director Freddy David

Maria Nikolova

The order prohibits Mr David from performing any function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional firm.

The UK Financial Conduct Authority (FCA) on Wednesday issued an order prohibiting HBFS Director Freddy David from performing any function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional firm. The order takes effect from May 15, 2019.

In July 2018, Mr David was convicted of one count of obtaining a money transfer by deception and one count of fraud by abuse of position, each count encompassing a course of conduct running from January 2005 to November 2017. He was sentenced to four years’ imprisonment and six years’ imprisonment respectively in relation to the above counts, the sentences to be served concurrently.

Between January 1, 2005 and November 10, 2017 Mr David presented an investment opportunity, purportedly in high interest financial products at Bank of Scotland Plc and Barclays Bank Plc, to some of HBFS’s clients. In total 55 clients transferred approximately £14.55 million directly to HBFS for investment in those products. The financial products did not, however, exist.

In reality, Mr David used the majority of the money of the defrauded HBFS clients to fund his gambling habit, with a lesser amount used to pay school fees, mortgage payments, personal investments and spending abroad. From January 2005 to October 2017, Mr David spent approximately £15 million on gambling websites which provided returns of approximately £1.5 million.

Mr David did not make the investments that he had represented to the clients, but he did make periodic payments to some of them to make them believe there was an investment and that it was performing well. Mr David funded those payments with money fraudulently obtained from later investors or by withholding interest on the legitimate investments of other clients. By making those payments, Mr David was able to maintain the fraudulent scheme for over 12 years and ensure that clients did not become aware of his deception.

On the basis of Mr David’s conduct, the FCA finds he is not a fit and proper person to perform any function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional firm. The Authority considers that his convictions demonstrate a clear and serious lack of honesty and integrity such that he is not fit and proper to perform regulated activities.

In reaching this conclusion, regulator has considered all relevant circumstances, including the relevance and materiality of the offences and the severity of the risk posed by Mr David to consumers and financial institutions and to confidence in the market generally. The Authority finds that the prohibition order advances its consumer protection and integrity operational objectives.

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