The FSA has fined a former compliance officer at foreign exchange broker ActivTrades £3,000 and banned him from holding a compliance oversight function for failing to ensure ActivTrades adhered to the FSA’s client money rules.
The FSA fined ActivTrades £85,000 in March for breaching client money rules.
David McGrath was responsible for ensuring that ActivTrades kept client money separate from the firm’s money in segregated accounts with trust status, in order to safeguard clients’ money in the event of the firm becoming insolvent.
ActivTrades was visited as part of a FSA thematic review of client money arrangements last year. Based on the initial findings of this review, the FSA told ActivTrades to appoint a skilled person to review its client money arrangements.
The FSA found that McGrath failed to ensure ActivTrades had correct accounting methods in place and handled client money in accordance with FSA rules, failed to implement adequate risk management systems to ensure client money was protected, and failed to demonstrate appropriate knowledge of client money rules.
FSA head of client assets unit Richard Sutcliffe says: “Compliance officers have an important consumer protection role as they are responsible for making sure that the businesses that they oversee comply with regulatory requirements and standards. Ensuring that client assets are properly managed and protected is a key responsibility for firms.
“Mr McGrath fell short of the standards that we would expect in this area and accordingly we have taken action to stop him from holding a compliance oversight function in the future. Firms of all sizes must ensure that any client money they hold is properly segregated and that safeguards are in place.”