FSA Censures Intermediary Firm for Financial Promotions
On August 6, the FSA issued a final notice censuring City Gate Money Managers Ltd (City Gate), an intermediary firm, and banning its director and compliance officer, Stewart Domke, for financial promotion and other compliance failings. Final Notice.
The FSA found that City Gate breached s.20(1)(a) FSMA as it had advised on pension transfer and income drawdown business when it did not have permission to do so. City Gate was also found to have produced a financial promotion which failed to explain in offer letters the risks of investing in the offer being promoted. Mr. Domke failed to ensure that the financial promotion issued by City Gate complied with FSA rules. The FSA withdrew his approval to perform significant influence functions and banned him from performing any significant influence function in relation to any regulated activity.
The final notice states that the FSA would have fined City Gate £180,000 had it not been in liquidation, but issued a public censure instead.
Germany Toughens its Take on AIFMD
On July 20, the Federal Ministry of Finance and the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published its draft for the implementation of the Alternative Investment Fund Managers Directive (AIFMD).
Highlights of the new ‘Capital Investment Code’ (Kapitalanlagegesetzbuch) include:
Distinction between AIF whose shares/units may be held by professional investors only (so called ‘specialised-AIF’) and AIFs whose shares may be held by non-professional investors.
Real estate (RE) and infrastructure funds can only be established as closed-ended funds. Existing open-ended RE/infrastructure funds would benefit from a grandfathering rule and could continue to exist in the same form as before.
Non-professional investors will only be permitted to invest in certain fund types, e.g. they are prohibited from directly investing into certain fund types such as hedge funds or private equity funds. Investment into these vehicles will only be allowed via fund of funds or master-feeder structures.
Private placements for third country funds should be abolished. Third country funds would only be allowed to market their funds in Germany if certain (extensive) requirements are met.
Interested parties have until August 17 to comment on the 500-page document.
OFT Fines Payday Lender for Breach of Money Laundering Regulations
On August 9, the OFT published a press release stating that it had imposed a £544,505 fine on MCO Capital Ltd (MCO), an online payday lender, for breaching the Money Laundering Regulations 2007 (MLRs) and had also revoked MCO's consumer credit licence.
MCO had failed to adequately verify the identities of loan applicants, which led to it being targeted by fraudsters who used the details of over 7,000 individuals to apply for loans. MCO was also found to be engaged in unfair business practices by writing to people who they were aware may not have taken out loans, asking unequivocally for repayment. MCO's licence was revoked as the OFT found it lacked the necessary skills, knowledge and experience to run a consumer credit business.
MCO has a right to appeal the OFT's decision.
Tracey McDermott Appointed as FSA's Permanent Director of Enforcement
The FSA has confirmed that Tracey McDermott, the FSA's acting head of enforcement, will become the permanent director of enforcement and financial crime.
McDermott joined the FSA as an associate in enforcement 2001, and has been acting as director since April 2011. During her time as acting head of enforcement, she has secured 10 convictions for insider dealing and imposed the largest FSA fine to date of £59.5 million on Barclays Bank plc for attempting to manipulate the LIBOR rate.
The FSA will divide into the Prudential Regulation Authority and the Financial Conduct Authority in 2013. McDermott's role will transfer over to the Financial Conduct Authority.