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Financial services investigations and enforcement monthly round up - July 2019

A round-up of recent enforcement actions and investigations in the financial services sector

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Standard Life Assurance Limited fined £30 million

  • On 23 July 2019, Standard Life Assurance Limited (SLAL) was fined over £30million for failures related to non-advised sales of annuities.
  • The FCA found that SLAL failed to put in place adequate controls to monitor the quality of calls between call handlers and non-advised customers. SLAL also offered staff large financial incentives to sell annuities, which conflicted with giving customers full and accurate information. During the period of misconduct, 22% of call handers received more than 100% of their basic salary in bonus payments.
  • When the problem was identified, SLAL carried out a past business review to identify customers who had been affected. As at 31 May 2019, had paid approximately £25.3 million to over 15,000 customers.
  • SLAL's overall fine was discounted by 30%, since the firm agreed to accept the FCA's findings. If it had not done so, the financial penalty would have been in excess of £43million.

Two found guilty of insider dealing

  • On 27 June 2019, ex-UBS employee Fabiana Abdel-Malek, and her friend, Walid Choucair were sentenced to 3 years' imprisonment on insider trading charges.
  • Ms Abdel-Malek, a former UBS compliance officer, used her position to identify information relating to the proposed takeovers of five companies which she then passed on to her family friend Mr Choucair, an experienced day trader of financial securities. Mr Choucair made £1.4 million profit from the trades. The two sought to conceal their criminal activity by using unregistered pay-as-you-go 'burner' phones.
  • The prosecution did not claim Ms Abdel-Malek received any money for passing on the inside information, but both defendants were given the same sentence. In return for access to the information, Mr Choucair gave Ms Abdel-Malek access to his extravagent lifestyle.
  • The case is the FCA's only big insider trading trial to reach a jury in the past three years. The FCA commented that it 'is determined to attack all forms of insider dealing from opportunistic insiders to those who devise dishonest schemes to exploit and manipulate sources of inside information.'

FCA publishes Enforcement Annual Performance Report and AML Report

  • On 9 July 2019, the FCA published its Enforcement Annual Performance Report which gives an overview of the FCA's enforcement activities during 2018/2019.
  • Whilst the total number of financial penalties imposed by the FCA remains the same as the previous year, the value has significantly increased from £60.9million to £227.3million. A link to the report can be found here.
  • The FCA also published its Anti-money Laundering Annual Report for 2018/2019 on 9 July 2019. The FCA has confirmed it has over 60 ongoing AML investigations, some of which are being investigated on a dual track basis, incorporating both criminal and regulatory investigations. The report can be found here.

High court orders payment back to FCA

  • Four defendants, Samuel Golding, Shantelle Golding, Digital Wealth Limited and Outsourcing Express Limited have been ordered by the High Court to pay back funds that were raised in an unauthorised investment scheme, to the FCA. The FCA will distribute the recovered monies to investors.
  • The defendants set up a scheme purporting to involve purchasing wholesale goods from China for onward sale at unrealistic high returns. In fact, it was an unauthorised investment scheme and illegal deposit-taking which contravened FSMA. The schemes raised over £15million.
  • The FCA took urgent enforcement action to prevent the disposal of the funds. Of the total raised, £9.25million was paid out to investors as returns and the defendants spent £2.7million.
  • As a result of the court order, the FCA will take control of £3.4million which will be distributed to affected consumers. This will still leave consumers with a loss of at least £2.7million.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2019. Specific advice should be sought for specific cases. For more information see our terms and conditions.

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