Release Date: 4th October 2022
To access the original FCA document, click here.
Summary
Mr Simon John Tyson has been fined £67,900 by the Financial Conduct Authority (FCA) and prohibited from performing any senior management or significant influence function in any regulated activity. This fine was reduced from £75,500 due to a 10% discount for early settlement. Tyson’s regulatory failings occurred while he held the roles of CF1 (Director), CF3 (Chief Executive), and CF11 (Money Laundering Reporting) at Sigma Broking Limited from 1 December 2014 to 12 August 2016.
Key Takeaways for Other Firms:
- Risk Assessment and Preparation:
- Perform thorough risk assessments before expanding into new business areas, especially with high-risk financial products.
- Compliance with Reporting Obligations:
- Ensure accurate and timely reporting of transactions and suspicious activities to the FCA.
- Effective Governance and Oversight:
- Hold regular board meetings with proper documentation and management information to oversee business activities effectively.
- Competence and Training:
- Ensure senior management and compliance officers have the necessary skills and knowledge to fulfil their responsibilities.
Summary of Findings:
- Inadequate Governance and Risk Management:
- Sigma expanded into contracts for difference (CFDs) and Spread-Bets without adequate risk assessment or preparation for regulatory compliance. These high-risk products are attractive to market abuse, including insider trading.
- The Board, led by Mr Tyson as Chief Executive, failed to implement sufficient oversight and risk management systems.
- Failure to Meet Transaction Reporting Obligations:
- Sigma failed to report or inaccurately reported approximately 56,000 transactions, breaching SUP 17.1.4R and SUP 17.4.1 EU/SUP 17 Annex 1 EU. This hindered the FCA’s ability to monitor market abuse.
- Inadequate Monitoring of Suspicious Transactions:
- Sigma did not identify or report any suspicious transactions (STRs/STORs) during the relevant period, despite significant activity that warranted such reports, breaching SUP 15.10.2R and Article 16(2) EU MAR.
- Deficient Compliance Oversight:
- As Chief Executive and Director, Mr Tyson failed to ensure adequate systems and controls were in place, compromising the Board’s ability to oversee the CFD desk’s business activities.
- Mr Tyson did not ensure the Board received adequate management information to fulfil its oversight role and failed to verify the competence of delegated compliance responsibilities.
Conclusion:
Simon John Tyson’s significant failings in governance, risk management, and compliance oversight at Sigma Broking Limited resulted in substantial regulatory breaches. The FCA’s penalties underscore the importance of robust governance, thorough risk assessments, and effective compliance functions. Other firms should heed these key takeaways to prevent similar penalties and ensure the integrity of their operations and the financial system.
Back to the Dear CEO letter archives.