Arch Financial Products (AFP) chief executive Robin Farrell made £492,359 from the sale of shares in the Arch group to the Arch Cru fund range, the Financial Services Authority (FSA) has revealed.
Today the FSA revealed it wants to ban Farrell and AFP's former compliance director Robert Addison from working in financial services, and fine them £850,000, for failing to ensure conflicts of interest were properly managed during AFP's management of the Arch Cru fund range.
In the FSA's decision notice in the case, the regulator said AFP caused the [Arch Cru] Guernsey cells to purchase shares in AFP's parent company, Arch Group Ltd (AGL) at a price determined by one of its directors with no independent verification of the price and inadequate contemporaneous recording of the conflict of interest.
"While Mr Farrell and Mr Addison of AFP disclosed to the non-AFP directors of the Guernsey cells that AFP was going to direct the Guernsey cells to purchase newly issued shares in AGL to raise new capital for AGL, the non-AFP directors of the Guernsey cells were not informed that Mr Farrell was also going to be selling his personal shares in AGL to the Guernsey cells for a personal capital gain of £492,359.
"Nor were the non-AFP directors of the Guernsey cells informed as to the price per share at which the Guernsey cells were to be purchasing the shares," the FSA's decision notice stated.
The FSA's main censure of AFP, Farrell and Addison was that they were in a position of trust and needed to demonstrate fair management of conflicts of interest, and in the FSA's opinion they "recklessly" failed to do so.
Farrell, Addison and AFP have referred the matter to the upper tribunal where they and the FSA will present their evidence to an independent panel.
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