The Upper Tribunal has given the green light to the Financial Conduct Authority to fine Keydata founder £76 million.
In a decision made today, the court said that although it did not accept all of the FCA's submissions on the conduct of Stewart Ford (pictured), founder of Keydata, it said it is satisfied 'Ford's conduct demonstrated a consistent failure by him to act with integrity'.
The court also decided that it is appropriate for the FCA to impose a penalty of £3.2 million on Owen. It upheld FCA's decision to ban both directors from performing any function in relation to any regulated activity.
Last year the FCA had announced that it decided to fine Ford £75 million and former Keydata sales director Mark Owen £4 million.
Now, the Upper Tribunal decided to increase the penalty to £76 million because it was determined that the financial benefits Ford received needed to be adjusted.
'To permit Mr Ford to retain those financial benefits would in effect be to reward him for both continuing to disregard his regulatory responsibilities over an extended period and engaging in active concealment to perpetuate his money-making activities,' the court said.
The Tribunal added it found that Ford 'actively concealed material matters from investors, IFAs and the Authority'.
'Having regard to the evidence as a whole, including the expert evidence as to the objectively-assessed state of the SLS and Lifemark portfolios, and taking account of the Authority’s actions, we find that the Authority acted appropriately in performance of its regulatory functions in the face of a determined campaign of concealment and obfuscation orchestrated by Mr Ford,' the Tribunal noted.
'In our judgment the consumer detriment is laid squarely at Mr Ford’s door by reason of his continuing failures to disclose to the market his own knowledge and awareness of the true position of the SLS and Lifemark Products.'
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 sold structured products to retail customers. In 2005 it started marketing products on bonds issued by Luxembourg-based SLS Capital without conducting proper due diligence and by using misleading brochures. A year later, the same was done with Lifemark SA, a company beneficially owned by Ford. Through these arrangements Ford received £73 million in fees over the years.
Keydata entered administration in 2009 over tax debts incurred when the regulator at the time deemed it had mislabelled products as ISAs.
An investigation following the collapse revealed that £103 million of investors' money which was supposed to have been invested in life settlement funds through SLS Capital had disappeared.
Ford has been fighting the fine imposed by the FCA and has had a £600 million claim against the regulator dismissed back in 2016. Ford also sued his lawyer for £4 million claiming that he helped contribute to the collapse of the company.