The Financial Conduct Authority has issued three further fines and cancelled the permissions of a compliance head and compliance officer at two separate firms in relation to market abuse by a Dubai-based investor who last year was hit with the regulator’s largest ever fine on an individual.
The FCA has fined Tariq Carrimjee of Somerset Asset Management £89,000 and has banned him from performing any role in regulated financial services.
It has also fined David Davis, senior partner and compliance officer of broker firm Paul E Schweder Miller & Co, £70,258, and Vandana Parikh, a broker at the same firm, £45,673, for their respective roles in the lead up to the manipulation.
Mr Davis’s signficant influence function permissions have been removed and he has also been prohibited him from holding those functions in future.
In November 2011, the Financial Services Authority issued Dubai-based private investor Rameshkumar Goenka with a fine of $9.6m, the largest fine it has ever imposed on an individual, for market abuse.
According to the regulator, Mr Goenka manipulated the closing price of Reliance Industries securities on the London Stock Exchange in October 2010 to avoid a loss of $3.1m under the terms of a structured product he held.
The FCA said Mr Carrimjee “recklessly assisted” Mr Goenka in his plan to manipulate both Gazprom and Reliance securities. He is said to have introduced Mr Goenka to the brokerage at which Mr Davis and Ms Parikh worked for the purpose of trading in closing auctions and participated in discussions about, and assisted with arrangements for, specific trades.
The FCA added that Mr Carrimjee did this despite his suspicions Mr Goenka held structured products related to the trading.
Mr Carrimjee held significant influence function positions at Somerset at the relevant time and was responsible for compliance oversight. Mr Carrimjee has referred his decision notice to the Upper Tribunal.
The FCA said in a separate notice that in April 2010 Mr Goenka was introduced by Mr Carimjee to Ms Parikh, for the purpose of executing trades in Gazprom and Reliance securities in LSE closing auctions.
In conference calls, Ms Parikh explained the impact that the size and timing of various orders might have on the closing price. The FCA has concluded that Ms Parikh failed to act with due skill, care and diligence by explaining the process of manipulation to Mr Goenka without recognising the risk that this posed and without proper challenge or enquiry as to his intentions.
Mr Davis held senior management positions at Schweder Miller and was responsible for compliance oversight.
The FCA has concluded that Mr Davis failed to act with due skill, care and diligence by failing to challenge the instructions for Reliance and by failing to refuse to accept the orders to trade.
