The Tax and Chancery Chamber’s Upper Tribunal has confirmed the Financial Services Authority’s decision to ban Alberto Micalizzi from performing any role in regulated financial services and upheld an only marginally reduced fine of £2.7m.
In May 2012 the previous regulator, the FSA, banned and fined Mr Micalizzi, the former chief executive officer of hedge fund manager Dynamic Decisions Capital Management Ltd, for concealing masterfund losses and lying to investors about the true position of his fund. Mr Micalizzi referred the case to the Upper Tribunal.
Judge Roger Berner upheld the original decision to withdraw Mr Micalizzi’s approval on the grounds that he is not a fit and proper person. He also agreed with the FSA that Mr Micalizzi was both dishonest and lacked integrity.
The original financial penalty of £3m was reduced to £2.7m after the FCA withdrew an allegation over a forged signature, but the judge refused to reduce the fine further despite evidence that the penalty would likely push him into bankruptcy.
The judgement said: “Taking all the circumstances into account, we regard Mr Micalizzi’s misconduct to be at the most serious end of the scale.
“He was dishonest in a number of respects and overall he lacked integrity. His dishonesty adversely affected the interests of investors and lenders to the fund, and led to Nomura [Nomura Bank International plc] investing $41.8m on the basis of false representations made by Mr Micalizzi.
“Such misconduct merits a substantial penalty both to reflect the seriousness of the case, and as a deterrent to others.”
Mr Micalizzi argued that the proposed level of penalty should be reduced, submitting that FSA’s allegation that a signature had been forged had been seen as a significant aggravating factor. The FCA had since withdrawn that allegation.
Mr Micalizzi also argued that any financial penalty should be mitigated so as to take into account his position of financial hardship. The judgement states the only evidence of hardship is that any ‘meaningful penalty’ will result in bankruptcy.
The judge added that to have any real effect therefore, the penalty would have to be reduced to a de minimis amount, which would “clearly not be appropriate in a case such as this, where we have made findings of dishonesty and serious lack of integrity”.
