It ordered the failed investment company’s former CEO Stewart Ford and former sales director Mark Owen to pay fines of £76m and £3.2m, respectively, after ruling that they had acted without integrity and had been uncooperative in dealing with the Financial Services Authority – the predecessor to the FCA.
The tribunal also agreed that the two should be prohibited from working in regulated financial services.
“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,” said FCA executive director of enforcement and oversight, Mark Steward.
He said the tribunal found that Ford bore primary responsibility and had foregone his regulatory responsibilities for personal gain.
“Those who commit such misconduct have no place in the financial services industry,” Steward said.
According to the FCA’s decision notices, Keydata designed and sold investment products to retail investors through independent financial advisers. These were marketed as eligible for ISA status but it later transpired that they were not.
The products were underpinned by Keydata’s investment in bonds issued by two Luxembourg special purpose vehicles, SLS Capital SA and Lifemark SA. In turn, SLS and Lifemark invested in portfolios of life insurance policies from predominantly elderly US citizens.
Between 2005 and 2009, the business provided over £475m of SLS and Lifemark-backed products to some 37,000 investors. In June 2009, the FCA applied to appoint administrators on the grounds that Keydata was insolvent.
Ultimately, the firm was dissolved and its investors lost around £330m.
“A constant theme is the deliberate and calculated concealment by Mr Ford of material information, both as to the fees extracted by Mr Ford, and as to the serious issues that arose with respect to both the SLS and Lifemark Products,” the tribunal said.
The tribunal also heard that Ford had provided Owen with more than £2.5m in undisclosed commissions, which they both claimed to have been unrelated loans – the tribunal called this a “fabrication”.
In 2015, the FCA banned Keydata’s former finance director Craig McNeil and fined him £250,000. A year later the authority banned former compliance officer Peter Johnson, saying were it not for his financial hardship, it would have fined him £200,000.
"Without infringing the law or my conscience, I say and believe that I have been the victim of a grave injustice.
"For those who truly know me, you will be aware that this decision of the Upper Tribunal runs counter to every fibre of my being. My honour, my good name, my competence and my integrity have been impugned," said Ford.
In 2016, Ford threatened to include PwC alongside the FCA in a £650m lawsuit over what he described as a “politically motivated” abuse of power and misfeasance in public office