A FORMER director of a collapsed investment firm has been fined £350,000 and banned from top roles in a regulated finance company.
The punishment imposed on former Keydata Investment Services executive Craig McNeil follows a £75 million fine given to his former boss Scots entrepreneur Stuart Ford, who allegedly mis-sold £475m of so-called death bonds.
Keydata, which employed 140 people in Glasgow, London and Reading, sold the bonds to some 37,000 customers between 2005 and its collapse in 2009, doing so on the impression that they were eligible for tax-free ISAs, which they were not.
The Financial Conduct Authority said Mr McNeil, the former finance director of the firm, failed to challenge a series of financial irregularities, or to report them.
Mr McNeil, 56, who was responsible for the management of Keydata’s Glasgow-based corporate finance department, hit back at the move, saying the penalty was "ill-informed, inaccurate and self-preserving" and a "stitch-up".
Four years ago, the Serious Fraud Office closed its investigation into Keydata, saying it had "insufficient evidence to secure a prosecution in this case".
Mr Ford, a former print worker from Edinburgh who through Keydata created a £2.8 billion financial empire selling the so-called ‘death bonds’, is appealing to the High Court against his fine.
Mark Owen, the former sales director and Mr Johnson, the former compliance officer, faced fines of £4m and £200,000 respectively and a ban from any role in regulated financial services. They too are appealing to the High Court.
The FCA said that Mr McNeil had settled with them on the punishment, and that there is no right of appeal.
The authority said that issues relating to Mr McNeil came when Keydata invested in bonds issued by Luxembourg-based SLS Capital, which invested in portfolios of life settlement policies.
FCA said that when SLS failed to make certain payments to investors from early 2008, Keydata instead funded £4.2m in income payments from its own resources, masking the problems with SLS.
The FCA said that Mr McNeil was aware of these payments and failed to tell the regulator.
"It was not reasonable in the circumstances for Mr McNeil to rely on the fact that other directors might eventually tell us what was happening," said the FCA's acting director of enforcement and oversight Georgina Philippou.
Mr McNeil argued that he did disclose the fact the SLS was missing payments which Keydata covered.
"Keydata covered payments to investors and advisers from its own resources during the period of the alleged breach," he said. "I reported this exposure on our FCA financial return in March 2009. The FCA ignored this disclosure because no one at the FCA looked at this financial return.
"The FCA’s claim that I should have rung them up and explained what was happening in words of one syllable is nonsense. If they cannot read financial figures, they should not be regulating financial firms."
.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here