FSA Fines and Imposes Prohibition On Compliance Officer for Client Money Breaches and Fines Firm

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On May 1, the UK Financial Services Authority (FSA) published the final notices it had issued to David Thornberry and Christchurch Investment Management Ltd (Christchurch) for failings in relation to client money segregation. 

The FSA found that both Christchurch and David Thornberry had insufficient knowledge and oversight of compliance with the FSA’s client money rules. This led to serious breaches of the FSA client asset rules (CASS) which lasted from November 2007 until May 2010. Specific failures included failing to put in place adequate trust documentation for any of Christchurch’s 227 client bank accounts, which put client money at risk in the event of the firm’s insolvency.

The FSA fined Mr. Thornberry £11,550 (approximately $18,700) and prohibited him from acting as a compliance officer or having responsibility for client money or assets. This is the first time the FSA made such a prohibition order on an individual. The FSA fined Christchurch £26,000 (approx. $42,100). Christchurch and Thornberry agreed to settle at an early stage and therefore the financial penalties were reduced by 30%.

Richard Sutcliffe, head of the FSA’s Client Assets Unit stated:

“Christchurch’s failure to engage properly with the client assets rules is unacceptable. A firm must have adequate systems and controls in place to demonstrate that it complies with the CASS rules at all times. Otherwise clients are exposed to significant risks in the case of insolvency, fraud or poor handling of client money.”

For more information, click here.

 

Published In: Administrative Agency Updates, Business Torts Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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