The former chief executive and the ex-sales director of an investment firm that produced and distributed structured products to retail customers have just two weeks to pay nearly £80m in fines after losing an Upper Tribunal appeal.
Stewart Ford and Mark Owen of Keydata Investment Services will have to pay £76m ($98m, €86m) and £3.2m, respectively, to the Financial Conduct Authority by 1 February 2019.
They were found guilty of acting without integrity and not co-operating with the regulator between July 2005 and June 2009, when the firm was shut down by the FCA’s predecessor, the Financial Services Authority.
An article from the BBC in 2010 reports that nearly 30,000 customers lost around £450m.
The FCA’s initial decision was announced in November 2014, but Ford and Owen appealed. The Upper Tribunal was held in November 2018 and the ruling confirmed on 16 January 2019.
This gives the men just 16 days to get the money and pay the fines.
If, by 2 February 2019, the financial penalties remain unpaid – either partly or in full – the FCA has the power to recover any outstanding amount as a debt owed to the regulator.
Fingers in pies
The case is complicated and involves three companies in two countries.
After setting up Keydata in the UK in 2001, Ford launched a Luxembourg-based company in 2005 called SLS Capital that marketed bonds underpinned by US life settlement policies – also known as death bonds.
However, he did so without conducting due diligence and used misleading brochures.
In 2006, Ford set up another business called Lifemark, which replicated SLS’s structure. In the three years that followed, he managed to generate £73.3m worth of fees and commission through marketing Lifemark bonds to Keydata clients.
During the same period, Owen received £2.5m in undisclosed commissions from Ford, which the Upper Tribunal denounced as a “fabrication” showing a “lack of integrity”.
Not commercially justifiable
The tribunal said in November that the payments were received for either “no services whatsoever” or “for services unrelated to [the Lifemark] products” and “could not be justified commercially”.
At the time, Mark Steward, executive director of enforcement and market oversight at the FCA, said:“Keydata sold complex structured products backed by life settlements based on misleading brochures and without properly assessing whether the products could meet what was promised.”
