FCA slaps £76 million fine on ex-Keydata Investment Services CEO Stewart Owen Ford
Mr Ford is said to have failed to act with integrity and to have failed to deal with the FCA in an open and cooperative way between July 2005 and June 2009.
The UK Financial Conduct Authority (FCA) has earlier today issued its Final Notice regarding Stewart Owen Ford.
The regulator imposes a financial penalty of £76 million on Stewart Owen Ford. The FCA also makes an order which takes effect from the date of this Final Notice (today) prohibiting Mr Ford from performing any function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional firm.
By a decision notice dated November 7, 2014, the FCA notified Mr Ford that it had decided to impose on him a financial penalty for failing to act with integrity (in breach of Statement of Principle 1) and for failing to deal with the Authority in an open and cooperative way (in breach of Statement of Principle 4) between 26 July 2005 and 8 June 2009. During that period, Mr Ford held the controlled functions CF1 (director), CF3 (chief executive) and (until 31 October 2007) CF8 (apportionment and oversight) in respect of Keydata Investment Services Ltd.
Back then, the Authority notified Mr Ford that it had decided to make an order prohibiting him from performing any function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional firm.
In December 2014, Mr Ford referred the decision notice to the Upper Tribunal, which released a written decision in respect of this reference on November 6, 2018.
The Tribunal ruled that the appropriate action for the Authority to take was to impose on Mr Ford a financial penalty of £76 million and remitted the reference to the Authority with a direction to impose a penalty on Mr Ford in that amount. The Tribunal dismissed the reference of Mr Ford in respect of the prohibition order.
In light of the above and in accordance with the Tribunal’s direction, the FCA has issued this Final Notice.
Mr Ford must pay the financial penalty to the Authority by no later than February 1, 2019, 16 days from the date of this Final Notice. If all or any of the financial penalty is outstanding on February 2, 2019, the FCA may recover the outstanding amount as a debt owed by Mr Ford.
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’.