Compliance
Tribunal Upholds UK Regulator's Bans On Arch Financial Products CEO, Colleague
A tribunal has upheld a ruling by the UK’s financial regulator over two years ago to censure Arch Financial Products and ban two of its executives from working again in the financial industry because of conflicts of interest failings.
A tribunal has upheld a ruling by the UK’s financial regulator over two years ago to censure Arch Financial Products and ban two of its executives from working again in the financial industry because of conflicts of interest failings.
The Financial Conduct Authority yesterday said that the Upper Tribunal has upheld the FCA’s decisions concerning the firm, including a ban on Robin Farrell, Arch’s chief executive, and Robert Addison, a senior partner and former compliance officer, from performing any role in regulated financial services.
Penalties of £650,000 ($987,525) and £200,000 were imposed on Farrell and Addison respectively. The tribunal also upheld the FCA’s decision that it would have fined Arch £9 million for its misconduct, were it not for the firm’s financial position.
The judgment was issued by the tribunal on 19 January this year after a hearing during May 2014. It remains open to the parties to appeal this judgment, the FCA said in a statement.
“The tribunal found that Arch, Mr Farrell and Mr Addison were reckless as to whether they had managed the conflicts of interest in four specific transactions fairly, and so lacked integrity, and that they failed to ensure that Arch adequately identified and took appropriate steps to mitigate and record the conflicts of interest in its business,” the statement continued.
“The tribunal found further deficiencies in how Arch segregated and controlled its access to, and use of, non-public information in its business, and found failures by Arch and Mr Addison in relation to Arch’s compliance monitoring procedures. It did not uphold the FCA’s findings about the liquidity and spread of risk in the CF Arch cru funds managed by Arch,” it said.
The Arch case has been a closely-watched saga in the UK financial industry as it raised issues such as conflicts of interest and how these can put clients at risk. Attention has focused more sharply on such problems in the wake of the 2008 financial crisis, prompting regulation such as the UK’s Retail Distribution Review programme of reforms.
