The Financial Services Authority (FSA) has today fined Vantage Capital Markets LLP (Vantage) £700,000 for failing to prevent Daniel Hassell from performing a function without obtaining the FSA's approval, for more than four years.
Vantage knew that Hassell was not an approved person and that the FSA was not satisfied that he was a fit and proper person to perform a significant influence function.
Vantage, an interdealer broker, was formed as a limited liability partnership in 2004 and has three capital partners. Hassell was not a capital partner, but despite a job title of 'consultant', exercised a significant influence over Vantage. The majority of the brokerage business was previously owned by Hassell and generated around half of Vantage's revenues. Hassell received approximately one third of the firm's profits, the remainder being shared between the capital partners. Hassell was, on occasion presented as an owner in correspondence and was seen as such by some of the Vantage staff.
FSA rules require those performing significant influence functions to be approved persons. At the time of its authorisation Vantage applied for Hassell to be an approved person as partner of Vantage. However Hassell was the subject of an FSA investigation. The FSA informed Vantage of its concerns about Hassell and Vantage withdrew the application.
In February 2007, the FSA told Hassell that he was no longer being investigated. Vantage applied again for approval for Hassell, but withdrew the application after the FSA indicated that it would not approve Hassell to perform a significant influence function due to issues arising from the investigation Despite this Vantage failed to prevent Hassell from exercising a significant influence over the firm until an FSA supervisory visit in 2009.
Vantage breached FSA Principle 3 by failing to organise and control its affairs effectively in that it did not prevent Hassell from acting without FSA approval. It also breached s.59 of the Financial Services and Markets Act 2000. The breaches were particularly serious because the FSA had raised its concerns about Hassell with Vantage on two occasions and because they persisted for a number of years.
Margaret Cole, FSA director of enforcement and financial crime, said
"Vantage failed to prevent an individual from acting in a significant influence role without FSA approval. This was despite the fact that Vantage knew that the FSA did not regard that individual as a suitable person to manage the firm.
"Ensuring that the right people are running firms is a key element in our regulatory regime. Firms that do not comply with our rules can expect a tough response from the FSA."
Vantage co-operated with the FSA and qualified for a Stage 1 (30%) discount under the FSA's settlement discount scheme. The financial penalty of £700,000 reflects this discount. Without the discount, the financial penalty would otherwise have been £1m.