RegulationNov 17 2015

Ex-Aviva Investors analyst fined £139k for ‘cherry picking’

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Ex-Aviva Investors analyst fined £139k for ‘cherry picking’

The FCA has banned and fined an ex-Aviva Investors analyst at the heart of the fixed income ‘cherry picking’ affair which saw the firm fined £17.6m earlier this year.

The asset manager was fined in February after two members of its fixed income team were reported to have delayed booking trades in order to allocate successful price movements to more lucrative products, thus increasing their own performance bonus.

The regulator has now banned Mothahir Miah, a former investment analyst, from performing any regulated activity in financial services, and fined him £139,000.

The regulator said Mr Miah had exploited a weakness in Aviva Investors’ trading systems and controls between January 2010 and October 2012.

Mark Steward, FCA director of enforcement, said: “Mr Miah abused the trust given to him by his clients in a very clear and deliberate way. It is vital that Approved Persons operate with honesty and integrity at all times. Mr Miah did not.”

An FCA investigation, prompted by Aviva Investors’ admittance of wrongdoing, found Mr Miah was one of two traders who regularly delayed booking trades by several hours. The fund house’s rules meant trades for long-only funds needed to be booked within 15 minutes, with those for hedge funds within an hour.

The FCA said: “Mr Miah knew cherry picking was wrong, but was motivated by a desire to prove his trading ability to his colleagues and increase his prospects of being promoted.

“This is because the culture within the fixed income business was heavily focused on performance and promotions tended to be based on reported investment performance.”

Mr Miah agreed to settle at an early stage of the investigation and qualified for a 30 per cent discount as a result, the regulator added.

At the initial investigation, the FCA said between 2005 and 2013 Aviva Investors managed certain fixed income strategies side-by-side, meaning funds with different fee levels were managed by the same desk.

Two traders abused internal processes to delay certain trades for several hours, then allocated favourable trades to higher-fee funds and non-favourable trades to others. A proportion of these higher fees were paid to traders as a performance bonus.

Aviva Investors paid £132m in compensation to clients in the eight fixed income funds affected.