Upper Tribunal upholds the FCA decision to fine and ban former Keydata executives

The Tribunal ruled that both had acted without integrity and had failed to deal with the FCA’s predecessor the Financial Services Authority in an open and cooperative way. The Tribunal has directed the FCA to fine Mr Ford £76 million and Mr Owen £3,240,787 and agreed that both should be prohibited from performing any role in regulated financial services.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:

"Keydata sold complex structured products backed by life settlements based on misleading brochures and without properly assessing whether the products could meet what was promised. The Tribunal found that Mr Ford bears primary responsibility for this, deliberately setting aside his regulatory responsibilities driven by his desire to maximise and preserve financial gain for himself. Those who commit such misconduct have no place in the financial services industry."

Keydata produced and distributed structured products designed for retail consumers. In 2005, Keydata began marketing products based on bonds issued by a Luxembourg-based company called SLS Capital SA (SLS) and underpinned by US life settlement policies. However, it did so without conducting adequate due diligence and using misleading brochures. In 2006, Mr Ford replicated the SLS structure using a company, Lifemark SA (Lifemark), beneficially owned by himself. As a result, over the following 3 years, he was able to extract fees from the structure totalling some £73.3 million. The Tribunal found that these payments were received either for 'no services whatsoever' or 'for services unrelated to [the Lifemark] Products' and 'could not be justified commercially'.

The Tribunal found that Mr Owen received £2,540,787 in undisclosed commissions from Mr Ford. Although both Mr Ford and Mr Owen claimed these payments to have been unrelated loans, the Tribunal concluded that this was a 'fabrication' which 'in itself, both for Mr Ford and Mr Owen, displays a lack of integrity'.

Despite being made aware of various concerns about the SLS and Lifemark products, Mr Ford and Mr Owen failed to disclose these to investors, IFAs or the Authority. The Tribunal considered 'A constant theme is the deliberate and calculated concealment by Mr Ford of material information, both as to the fees extracted by Mr Ford, and as to the serious issues that arose with respect to both the SLS and Lifemark Products'.

The Tribunal found that both Mr Ford and Mr Owen had made false statements to the Authority in compelled interviews, had failed to instruct Keydata’s compliance officer not to mislead the Authority and had failed to disclose, in Mr Ford’s case, his true involvement with Lifemark and, in Mr Owen’s case, the commissions received by him.

The FCA thanks the assistance provided by the SEC (United States), CSSF (Luxembourg), GFSC (Guernsey), FMA (Liechtenstein), Cayman Islands Monetary Authority, and the Central Bank of Ireland in the investigation of this matter.

Notes for Editors

1. Learn more about the Upper Tribunal’s judgment[1].
2. The FCA has previously taken enforcement action against Craig McNeil, Keydata’s former finance director and Peter Johnson, Keydata’s former compliance officer. The Final Notices can be found at: Final Notice for Craig McNeil[2] and Final Notice for Peter Johnson[3].
3. Between 2005 and 2009 Keydata provided over £475 million of SLS- and Lifemark-backed retail products. In June 2009, Keydata was placed into administration on the FCA’s application, on the basis that Keydata was insolvent. Keydata was dissolved on 2 July 2014.
4. In December 2014, the FCA published a factsheet[4] explaining what traded life policy investments (also referred to as 'life settlement policies') are and the marketing restriction rules applying to their distribution to retail investors in the UK. The paper confirmed that firms should not promote traded life policy investments to ordinary retail clients.
5. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has 3 operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
6. Find out more information about the FCA[5].