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FSA fines inividuals for distorting financial results

The FSA has taken its first enforcement action in relation to senior management of an insurance company, banning six former directors of a UK insurance company called Chiyoda Fire and Marine Insurance Company for their role in distorting financial results in 1999 and 2000.
Three individuals, Yoshiaki Yamazaki, Hiroshi Okazaki and Robert McKibbin are prohibited from working in any regulated activity. The remaining three individuals — Kazuhide Oda, Toru Morota and David Titterington are prohibited from managing people in a regulated activity.
The FSA says the individuals failed to act with “honesty and integrity as directors”. Their conduct demonstrated a fundamental lack of fitness and propriety and represented a risk to confidence in the financial system.
Andrew Procter, Director of Enforcement at the FSA says: “Fiddling the figures reported to the FSA or those declared in company accounts, has the potential to undermine regulation and destroy confidence in markets. This is why we think that only the very strongest of the sanctions available to us is appropriate in these circumstances. All of these individuals abused their positions and as such they are not fit and proper to work again in senior positions in the UK insurance market.
“We have been aware of the use of reinsurance contracts in financial engineering for some time and have made absolutely clear that such contracts can only be used where there is a legitimate commercial purpose. We also want to make clear that as the UK financial regulator we would regard the behaviour of insurance companies involved in transactions similar to those outlined above as falling below the standards that we require of UK regulated companies. Nobody should doubt our resolve to deal with any similar instances in the most robust manner available to us.”

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