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FSA issues first combined ban and fine for mismarking trading positions

The FSA has banned and fined a BlueCrest Capital Management Limited former portfolio manager £35,000 for deliberately mismarking his positions.

This is the first time the FSA has both banned and fined an individual for mismarking trading positions.

Loic Albert Antoine Montserret mismarked his positions in an attempt to avoid losing his job over losses he was making on his trading book.

The FSA says from November 2007 to May 2008, Montserret managed $60m of the capital in the BlueCrest Multi Strategy Credit Fund.

During April 2008, changing market conditions resulted in a significant fall in the value of Montserret’s trading book which he knew would put his job at risk. To disguise the extent of his losses, Montserret mismarked four equity index options by valuing them at nearly two to three times their actual market price.

The regulator says the mismarking went on for ten days and resulted in the fund being overvalued by $8.6m. On the tenth day, he admitted the overvaluation to the head of his trading desk.

Montserret’s actions also prevented BlueCrest from properly monitoring his trading book. The FSA says this meant that customers were put at the risk of making investment decisions based on incorrect information.

FSA director of enforcement Margaret Cole says: “Market professionals cannot resort to mismarking whatever the circumstances. Mr Montserret’s behaviour fell short of the standards expected from approved persons and showed a lack of integrity and honesty on his part.

“It is important that investors can trust market professionals to always do their job appropriately and fairly. Our tough action in this case should serve as a deterrent to others who might damage market confidence by acting in a similar manner.”

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