The Upper Tribunal has upheld the decision of the Financial Conduct Authority to prohibit and impose substantial fines on Stewart Ford and Mark Owen, respectively the former CEO and sales director of Keydata Investment Services Limited.
The judgment followed the longest ever financial services disciplinary hearing: a six-week contested hearing in the Upper Tribunal which took place in October 2017. The fine imposed on Mr Ford (£76 million) is also the highest fine ever imposed on an individual by the FCA.
Keydata produced and distributed structured products designed for retail consumers. The products were based on bonds issued by Luxembourg SPVs (SLS Capital SA and Lifemark) and underpinned by US life settlement policies. The Tribunal found that Mr Ford had personally extracted fees from the Lifemark structure totalling some £73.3 million in return for “no services whatsoever” or “for services unrelated to [the Lifemark] Products” and which “could not be justified commercially”.
The Tribunal found that Mr Owen also received £2,540,787 in undisclosed commissions from Mr Ford. Although both Mr Ford and Mr Owen claimed these payments to have been unrelated loans, the Tribunal concluded that this was a “fabrication” which “in itself, both for Mr Ford and Mr Owen, displays a lack of integrity”.
The Tribunal further found that Mr Ford and Mr Owen had failed to disclose to investors, IFAs or the Authority that the products were failing, concluding that “A constant theme is the deliberate and calculated concealment by Mr Ford of material information, both as to the fees extracted by Mr Ford, and as to the serious issues that arose with respect to both the SLS and Lifemark Products”. The failure of Keydata ultimately lead to consumer losses of some £450m.
The full judgment can be found here.
Andrew George QC and Daniel Burgess acted for the FCA before both the Regulatory Decisions Committee and the Upper Tribunal.