The FSA has fined inter-dealer broker Vantage Capital Markets (VCM) £700,000 for allowing a consultant to carry out unapproved functions for four years.
Vantage failed to prevent Daniel Hassell from performing the role of Controlled Function 4, the "Partner Function", and had a significant influence over the affairs of VCM despite not being approveto for this role by the FSA, the regulator says.
It adds Vantage knew Hassell was not an approved person and the FSA was not satisfied he was a fit and proper person to perform SIFs.
Vantage had applied for Hassell to be an approved person as a partner of Vantage.
However, Hassell was the subject of an FSA investigation and when the regulator told Vantage of its concerns about him the firm withdrew the application.
Hassell was not a capital partner at Vantage but despite a job title of ‘consultant', exercised a significant influence over the firm, according to the FSA.
The majority of the brokerage business was previously owned by Hassell and generated around half of Vantage's revenues. Hassell received approximately one third of the firm's profits, the remainder being shared between the capital partners.
Hassell was, on occasion, presented as an owner in correspondence and was seen as such by some of the Vantage staff, the FSA investigation found.
In February 2007, the FSA told Hassell he was no longer being investigated. Vantage applied again for approval for Hassell, but withdrew the application after the FSA indicated that it would not approve Hassell to perform a significant influence function due to issues arising from the investigation.
Despite this Vantage failed to prevent Hassell from exercising a significant influence over the firm until an FSA supervisory visit in 2009.
By doing so, the firm breached FSA Principle 3 by failing to organise and control its affairs effectively, and s.59 of the Financial Services and Markets Act 2000.
The FSA says the breaches were particularly serious because it had raised concerns about Hassell with Vantage on two occasions and they persisted for a number of years.
Margaret Cole, FSA director of enforcement and financial crime, says: "Vantage failed to prevent an individual from acting in a significant influence role without FSA approval.
"This was despite the fact that Vantage knew that the FSA did not regard that individual as a suitable person to manage the firm."
Vantage co-operated with the FSA and qualified for a 30% discount under the FSA's settlement discount scheme. The financial penalty of £700,000 reflects this discount. Without the discount, the financial penalty would otherwise have been £1m.
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