Release Date: 4th October 2022
To access the original FCA document, click here.
Summary
Mr Stephen John Tomlin has been fined £69,600 by the Financial Conduct Authority (FCA) and prohibited from performing any senior management or significant influence function in any regulated activity. The fine was reduced from £77,300 due to a 10% discount for early settlement. Tomlin’s regulatory failings occurred while he held the CF1 (Director) and CF10 (Compliance oversight) functions at Sigma Broking Limited from 1 December 2014 to 12 August 2016.
Key Takeaways for Other Firms:
- Effective Governance and Oversight:
- Ensure regular and well-documented board meetings with comprehensive management information.
- Perform adequate risk assessments before expanding into new business areas.
- Compliance with Regulatory Reporting:
- Implement robust systems to ensure accurate and timely transaction reporting as required by SUP 17 and Article 16(2) EU MAR.
- Adequate Compliance Functions:
- Establish clear roles, responsibilities, and effective communication within the compliance department.
- Provide sufficient training and guidance to compliance staff to discharge their responsibilities effectively.
Summary of Findings:
- Inadequate Governance and Risk Management:
- Sigma expanded its business into contracts for difference (CFDs) and Spread-Bets without adequate risk assessment or preparations for regulatory compliance. This failure is significant given the high-risk nature of these financial products.
- 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 a director, Tomlin failed to ensure adequate systems and controls were in place, compromising the board’s ability to oversee the CFD desk’s business activities.
- As CF10 (Compliance oversight), he failed to ensure clear roles and effective systems within the compliance department, and did not adequately inform himself about compliance oversight of the CFD desk.
Conclusion:
Stephen John Tomlin’s significant failings in governance, risk management, and compliance oversight while serving 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.
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