The Upper Tribunal (Tribunal) has upheld the decision of the Financial Conduct Authority (FCA) to issue a public censure against Arch Financial Products LLP (Arch), and to prohibit Robin Farrell, its chief executive, and Robert Addison, a senior partner and former compliance officer, from performing any role in regulated financial services.
Penalties of £650,000 and £200,000 have been imposed on Farrell and Addison respectively. The Tribunal also upheld the FCA’s decision that it would have fined Arch £9 million for its misconduct, were it not for the firm’s financial position.
The judgment was issued by the Tribunal on 19 January 2015 after a hearing during May 2014. It remains open to the parties to appeal this judgment.
The Tribunal found that Arch, Farrell and Addison were reckless as to whether they had managed the conflicts of interest in four specific transactions fairly, and so lacked integrity, and that they failed to ensure that Arch adequately identified and took appropriate steps to mitigate and record the conflicts of interest in its business.
The Tribunal found further deficiencies in how Arch segregated and controlled its access to, and use of, non-public information in its business, and found failures by Arch and Addison in relation to Arch’s compliance monitoring procedures. It did not uphold the FCA’s findings about the liquidity and spread of risk in the CF Arch cru funds managed by Arch.
Georgina Philippou, the FCA’s acting director of enforcement and market oversight, said: “We are pleased that the Tribunal agrees that Mr Farrell, Mr Addison and Arch fell short of the standards that we expect, failed to ensure that they put investors’ interests ahead of their own and could not demonstrate how conflicts of interest were effectively managed.
“The judgment is a further reminder to those who work in financial services that they have to act with integrity, and, that when they don’t, we will take action to remove them from the industry.”