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The Financial Services Authority (FSA) has today fined and banned chartered accountants Paolo Maranzana and Laurence Finger for Sedley Richard Laurence Voulters’ (SRLV) involvement with a boiler room share scam.
Maranzana was fined £105,000 and has been banned from working in financial services. Finger was fined £35,000 and has been banned from being a Money Laundering Reporting Officer. SRLV, which was authorised by the FSA, was fined £163,140.
In May 2008 SRLV was instructed by Natrocell Shareholders Limited (NSL) to assist with a fund raising by receiving and dispersing money through its client bank accounts and providing company secretarial and registrar services through its sister company. Maranzana, was the relationship partner for NSL and Finger was SRLV’s Money Laundering Reporting Officer.
To assist with the fundraising, NSL used the services of overseas entities to sell shares in NSL to investors. These entities were not authorised by the FSA, or in the countries where they were based. They were in fact share fraud operators, commonly known as “boiler rooms”.
The boiler rooms contacted at least 1,262 potential investors. Some were subjected to high-pressure selling techniques to encourage them to buy shares. They paid over £2.5 million into bank accounts operated by SRLV and significant sums were subsequently paid out on the instructions of NSL as commission to various boiler rooms rather than going to NSL.
Without the involvement of firms like SRLV, boiler rooms would not be able to operate effectively. Despite warning signs of possible financial crime by the boiler rooms, Maranzana and SRLV continued the disbursement of monies to the boiler rooms and their associates.
Margaret Cole, managing director of enforcement and financial crime, said:
"Authorised firms and their employees have an important role to play in combating financial crime. This means that they cannot turn a blind eye when they see warning signs that their clients might be involved in financial crime. In this case, the failures by SRLV, Finger and Maranzana to carry out their responsibilities had an impact on consumers who have probably lost their money by investing through boiler rooms."
Maranzana and Finger agreed to settle at an early stage and therefore qualified for a 30% discount under the FSA's executive settlement procedures. Were it not for this discount Maranzana’s fine would have been £150,000 and Finger’s £50,000. SRLV also settled at an early stage and were it not for this discount, the FSA would have imposed a financial penalty of £229,140. The penalty also includes the disgorgement of £9,140 in fees generated by SRLV over the period of the activity.
The investigation was carried out with the close cooperation of the City of London Police Economic Crime Directorate.
Background
- The Final Notices for Paolo Maranzana, Laurence Finger and Sedley Richard Laurence Voulters.
- Maranzana has been banned from performing any function in relation to any regulated activity carried on by any authorised person, exempt person or exempt professional firm, because he has fallen below the minimum regulatory standards in terms of integrity by acting recklessly. Maranzana is no longer a partner or employee of SRLV. Finger has had his approval to hold CF11 (Money Laundering Reporting Officer) withdrawn, and has been banned from holding this function in the future because he has fallen below the minimum regulatory standards in terms of his competence.
- Share fraud is estimated by the FSA to cost the UK around £200 million a year. Last year the FSA received calls from over 3,100 people who had been contacted by boiler rooms. Of these, 734 had become victims, losing an average of £24,000 each.
- Those who think they have been a victim of boiler room fraud should report the crime to their local police station. To assist with intelligence gathering, Operation Archway would also like people to complete a boiler room fraud questionnaire, which is available from the City of London website.
- NSL went into administration on 24 June 2009. Investors paid over £2.5 million for the shares of NSL as a result of the activities of the share fraud operators. It is unlikely that investors will recover the full extent of the money they paid for these shares.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.
