Release Date: 5th July 2013
To access the original FSA document, click here.
Summary
David Thomas Davis, a senior partner at Schweder Miller, was fined £70,258 by the Financial Conduct Authority (FCA) for failing to perform his significant influence functions with due diligence, particularly in compliance oversight. The fine included disgorgement of benefits accrued from the misconduct, specifically commission payments received for trades that posed a clear risk of market abuse.
The FCA’s investigation found that in October 2010, Davis authorised a series of substantial trades in Reliance GDRs during the LSE’s closing auction without proper scrutiny, despite several red flags that suggested potential market manipulation. These trades were intended to inflate the closing price of Reliance GDRs to benefit Mr. Rameshkumar Goenka, who aimed to influence the closing price to secure a payout under a structured product. The orders, placed seconds before the auction’s close, significantly impacted the closing price, and Davis’s failure to intervene or report these as suspicious was a breach of his regulatory responsibilities.
As a result, the FCA withdrew Davis’s approval to perform compliance oversight, CASS oversight, and money laundering reporting functions and prohibited him from holding these positions in the future. This enforcement action serves as a stark reminder to other firms and their compliance officers of the critical importance of robust oversight and intervention when faced with potential market abuse.
The key takeaway for firms is to ensure that their compliance functions are equipped to identify and address risks effectively, maintaining rigorous standards to prevent and report suspicious activities promptly.
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