The FSA has fined the former compliance officer at a Forex brokerage £3,000 and banned him from holding a oversight function for failing to keep client seperate from the firm's.
ActivTrades' compliance officer David McGrath failed to put in place proper risk management systems to ensure the protection of client money if the firm went bust, the FSA found.
The FSA said McGrath also failed to demonstrate an appropriate knowledge of the Client Asset Sourcebook Rules.
These failings placed some client money at risk should the firm become insolvent, the FSA said.
The FSA found the failings during an FSA visited ActivTrades as part of the regulator's thematic review of client money arrangements, and a followed up skilled person's review.
Richard Sutcliffe, head of the FSA's client assets unit said: "Compliance officers are responsible for making sure the businesses they oversee comply with regulatory requirements and standards.
"Ensuring client assets are properly managed and protected is a key responsibility for firms."
Under the FSA's client money rules, firms are required to keep client money separate from the firm's money in segregated accounts with trust status.
The FSA has introduced a new requirement for firms doing investment business to allocate a director or senior manager responsibility for oversight of client assets operational compliance.
From October, in firms holding more than £1m of client money or £10m of custody assets from investment business, the individual will need to be approved for the specific controlled function ‘CASS operational oversight function' (CF10a).
The FSA originally imposed a fine of £20,000 on McGrath, but this was reduced to £14,000 as a result of a 30% discount in accordance with the FSA's settlement discount scheme.
The fine was subsequently reduced to £3,000 as a result of McGrath's financial hardship.
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