The FCA has fined discretionary investment manager TJM Partnership Limited £2 million for “serious financial crime control failings.”
The firm, based at Old Bailey in the City of London, went into liquidation on 6 January.
It was found to have made serious errors on cum-ex trading, the buying and selling of shares with dividend payments attached.
The FCA said the firm was believed to have executed share trades worth at least £79bn.
The TJM Partnership Ltd (FCA No. 498199) was authorised and regulated by the FCA and was established in 2009 as a discretionary investment manager. It was a provider of bespoke trading and investment management services to high-net worth clients, family offices, companies and intermediaries.
The FCA fined TJM Partnership £2,038,700 for “failing to ensure it had effective systems and controls to identify and reduce the risk of financial crime and money laundering in its business. “
The FCA said today this is the third case it has brought in connection with cum-ex trading and the largest fine so far.
The FCA said TJM failed to have adequate procedures, systems and controls in place to identify and mitigate the risk of it being used to facilitate fraudulent trading and money laundering in relation to trading on behalf of clients of the Solo Group between January 2014 and November 2015.
TJM also failed to “adequately apply” its anti-money laundering policies and did not properly assess, monitor and mitigate the risk of financial crime.
Trading executed by TJM on behalf of the Solo Group’s clients throughout the period was characterised by a circular pattern of purported trades – characteristics which are highly suggestive of financial crime, the FCA said. The trading appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium.
TJM executed trading to the value of approximately £59 billion in Danish equities and £20 billion in Belgian equities and received commission of £1.4 million, a significant proportion of the firm’s revenue in the period.
The firm also failed to identify or escalate any potential financial crime concerns and money laundering risks in two other instances related to Solo Group business. This involved transactions with no apparent economic purpose except to transfer substantial windfall profits of £3.65m among its clients. TJM also accepted payment from a third party without appropriate due diligence.
The investigation process involved law enforcement agencies and regulatory partners around the world, the FCA said.
Mark Steward, executive director of enforcement and market oversight, said: ‘TJM allowed itself to become involved in a self-evidently suspicious scheme of circular transactions that looked like shams. TJM demonstrated a complete lack of care and diligence in participating in these transactions of dubious purpose.”
