The FCA has decided to fine Mr Ford, Mr Owen and Mr Johnson £75 million, £4 million and £200,000 respectively and to prohibit all three from performing any role in regulated financial services.
All three individuals have referred their Decision Notices to the Upper Tribunal where they and the FCA will each present their case. The Tribunal will then determine the appropriate action for the FCA to take. The Tribunal may uphold, vary or cancel the FCA’s decisions.
In the FCA’s view, Keydata Investment Services designed and sold investment products to retail investors via IFAs that were underpinned by Keydata’s investment in bonds issued by Luxembourg special purpose vehicles SLS and Lifemark. In turn SLS and Lifemark invested in portfolios of life settlement policies. The products were sold as eligible for ISA status, but they were not, in fact, eligible.
In the FCA’s opinion Mr Ford, Mr Owen and Mr Johnson failed to act with integrity and also misled the then Financial Services Authority on a number of occasions in relation to the performance of the investment products.
Additionally, the FCA believes that the three individuals permitted Keydata to continue to sell the Lifemark-backed products to retail investors when the individuals were aware that it was highly likely the products did not comply with the ISA regulations, that the financial promotions were unclear, incorrect and misleading, that the due diligence on the products was inadequate and that there were problems with the performance of the portfolio ultimately underlying the products.
Further, the Decision Notices set out the FCA’s view that Mr Ford and trusts set up for the benefit of his family received some £72.4 million in fees and commissions on sales of the Lifemark products and that Mr Owen received commissions on sales of the Lifemark products in the amount of £2.5 million. Both failed to disclose to the FCA the significant personal benefits and commissions they received.
In the view of the FCA, with regard to the SLS-backed products, Mr Ford deliberately concealed the problems with the portfolio underlying these products from investors, IFAs and the then FSA. Mr Owen then recklessly relied on assurances from Mr Ford that he would resolve the problems with the portfolio’s performance and solvency and agreed to Keydata funding the income payments to investors (which should have been funded by payments from SLS to Keydata) from Keydata’s own resources although he was aware this would conceal the portfolio’s solvency problems.
The FCA further considers that the individuals deliberately misled the FCA by making false representations to the FCA about the performance of the investment products.
Mr Ford, Mr Johnson and Mr Owen applied unsuccessfully to the Tribunal for an order preventing the FCA from publishing their Decision Notices.
