The Financial Services Authority has fined hedge fund boss Alberto Micalizzi £3m and banned him from performing any role in regulated financial services, after he lied to investors in his now defunct fund.
Micalizzi's was previously CEO and director of Dynamic Decisions Capital Management Ltd (DDCM), a hedge fund management company based in London.
A decision notice for Micalizzi says that, between 1 October 2008 and 31 December 2008, the master fund managed by DDCM suffered "catastrophic" losses of over $390m, approximately 85% of its value.
The FSA said Micalizzi then lied to investors about the true position of the fund to conceal the losses.
The FSA said he then purchased a bond which was not a genuine financial instrument, in an attempt to create artifical gains for the fund.
By providing false and misleading information, the FSA said he deliberately concealed the true value of the fund from one new investor who subsequently invested $41.8m on 1 December 2008.
The fund was placed into liquidation in May 2009 and the liquidator estimated that the fund's assets on liquidation were worth approximately $10m, although no payments have yet been made to any investors.
Micalizzi has been under investigation since 2010. The FSA said that during the course of that investigation Micalizzi repeatedly provided it with false and misleading information.
Tracey McDermott, the FSA's acting director of enforcement and financial crime, said: "Although investing in hedge funds can carry greater risk than many other asset classes, investors in funds controlled by regulated hedge fund managers are entitled to be treated with exactly the same honesty and integrity as other firms.
"Alberto Micalizzi's conduct fell woefully short of the standards that investors should expect and behaviour like his has no place in the financial services industry and we are committed to tackling it wherever we find it."
The FSA has also decided to cancel the permissions of the business itself as it believes it is failing to satisfy the threshold conditions and is not fit and proper, because it failed to ensure that its business was conducted soundly and prudently and in compliance with proper standards.
Both Micalizzi and DDCM have referred the matter to the Upper Tribunal.
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