The Financial Services Authority (FSA) has moved to ban and fine Arch Financial Products (AFP) directors Robin Farrell and Robert Addison for failings related to the management of the Arch cru fund range.
AFP, Farrell and Addison have referred the matters to the Upper Tribunal where they and the FSA will each present their case.
The Tribunal will then determine the appropriate action for the FSA to take. The Tribunal may uphold, vary or cancel the FSA's decisions, and will make its decision public on its website.
The FSA's Decision Notices, which reflect the FSA's belief as to what occurred and how the behaviour concerned is to be characterised, set out that the FSA has decided to bank Farrell and Addison from performing any role in regulated financial services.
It also resolved to to fine Farrell and Addison £650,000 and £200,000 respectively and that the FSA would have fined AFP £9m for its misconduct, were it not for the firm's financial position.
Instead, the FSA has decided to issue a public censure in respect of AFP's conduct.
AFP was the investment manager of the CF Arch cru Funds. AFP predominantly invested the funds in Guernsey cell companies listed on the Channel Islands Stock Exchange, which it set up and for which AFP was also the investment manager.
The Guernsey cells then invested in private market assets, such as private equity, private finance, hedge funds and other alternative asset classes.
AFP was in a position of trust and needed to demonstrate fair management of conflicts of interest.
In the FSA's opinion, AFP failed to do so. In respect of certain transactions where there was a risk of AFP (or its associates) making a gain at the expense of the Guernsey cells, the FSA's view is that AFP was reckless as to the risk that the conflicts of interest would not be managed fairly.
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