The Upper Tribunal has backed the FCA’s decision to ban and fine the chief executive of Catalyst Investment Group £450,000 for “reckless” promotion of life settlement products.
In August 2013 the regulator sought to ban and fine Timothy Roberts over his role in the collapse of Catalyst, which is now in default.
Catalyst was censured by the FCA in October 2013 for misleading investors when promoting bonds issued by Luxembourg-based life settlement vehicle ARM Asset Backed Securities.
It trigged a £30m interim FSCS levy for investment advisers in 2013/14, which was later postponed until 2014/15.
The FCA also wanted to ban and fine Catalyst director Andrew Wilkins £100,000, who was involved in compliance and financial promotions issues at the firm.
Both Roberts and Wilkins referred their cases to the Upper Tribunal.
In November 2009, the Luxembourg regulator told ARM to stop issuing bonds as it did not have the proper licence.
The Tribunal has now ruled that Roberts allowed Catalyst to continue promoting ARM bonds and collecting money from investors after November 2009, despite the statements from the Luxembourg regulator.
Roberts and Wilkins also allowed Catalyst to provide misleading information about ARM’s licence in a letter to advisers in December 2009. This was followed by another misleading letter to investors in March 2010.
The Tribunal has moved to water down the original sanctions proposed against Wilkins, halving the fine from £100,000 to £50,000. It has also referred the decision to ban him from senior roles in financial services back to the FCA.
In the judgment, Judge Terence Mowschenson says: “We consider that in acting as he did Mr Roberts lacked integrity in that he was reckless as to the interests of investors.
“He was aware that funds raised from pending investors might be at risk should the application for authorisation [the licence] be refused as the funds were not ring-fenced.
“It is no answer that steps were eventually taken to repay some of the investors.”
The judge added: “We consider the degree to which Mr Roberts acted with a lack of integrity to be serious.”