Neil Marlow, and his son Timothy, of the Bridford Group were approached by ‘businessmen’ with an investment scheme and did not properly consider whether the scheme could work or investigate who they were dealing with. They also made a series of unauthorised transfers of investors’ funds in an attempt to generate the returns on the investment that customers had been promised. The result was that the assets could not be realised at the scheduled maturity date to repay the investors. The customers would have lost all their investment but for the corporate trustees’ professional indemnity insurers agreeing to repay their capital and the interest payments they had been promised.
Both individuals settled at an early stage in the proceedings and the fine of £38,383 imposed on Neil Marlow and the fine of £31,838 on Timothy Marlow reflects this. Both have been banned from holding any significant management influence functions.
The FSA has also fined City Gate Money Managers Ltd of Glasgow £42,000 for approving financial promotions issued by the Appointed Representative (AR) run by the Marlows, designed to encourage investment in the scheme. The FSA found that City Gate failed to have adequate systems and controls in place to ensure that financial promotions issued by its ARs were clear, fair and not misleading.
City Gate also settled at an early stage in the proceedings. It has also agreed to a voluntary variation of permission to stop taking on any new ARs and stop conducting pension transfer business, an area over which the FSA also has concerns. It will also carry out a past business review which will look at products sold to customers other than those who invested in the scheme.
Margaret Cole, FSA director of enforcement, said: “The Marlows did not properly consider who they were dealing with and the feasibility of the investment scheme presented to them. The financial promotions they generated and submitted to City Gate were seriously deficient, which had the effect of misleading customers about the risks involved in investing in the scheme. They also demonstrated a lack of integrity in their management of the scheme by failing to secure customers’ assets when they had the opportunity to do so and transferring the assets between various banks without the permission or knowledge of the Scheme’s trustees. Poor judgement and mismanagement of this scale by directors is not acceptable and will lead to bans and fines.
“City Gate’s failings were serious. Firms which have AR networks have important responsibilities in monitoring them, including approving any financial promotions they issue. If they do not carry out these responsibilities properly they are failing the regulatory system and the IFAs and consumers who rely on them.”
