Mortgage broker fined GBP6,000 by court in FSA's first criminal prosecution for change of control failures
10th September 2009Vijay Kumar Sharma, sole director of mortgage broker Exetra (UK) Limited, pleaded guilty yesterday at City of Westminster Magistrates Court to charges of acquiring a controlling interest in the firm without giving the Financial Services Authority (FSA) prior notice of the acquisition and of making false or misleading statements to the FSA.
This is the first criminal prosecution brought by the FSA for failing to notify the regulator about a change in control at a regulated firm.
JudgementSharma was fined GBP3,000 for acquiring a controlling interest in a regulated firm without giving the FSA prior notice. He was also fined GBP3,000 for making false and misleading statements to the FSA and ordered to make a contribution towards the FSA's costs.
District Judge Purdy, delivering the verdict, said:
"You chose to circumvent the process by not notifying the FSA because you must have known that it would mean your application would be refused. These provisions are designed to protect the public from those individuals who are not fit and proper. This sentence will act as deterrence to others."
Margaret Cole, FSA director of enforcement, said:
"The FSA must be notified of any changes in control at a firm so we can assess the suitability of the individuals taking over. Being able to check the identity and integrity of a controller is central to proper regulation of the financial services industry and to our statutory duty to protect consumers.
"Sharma's failure to notify us of his acquisition of control at the firm was serious enough in itself. This was made worse by the false and misleading statements he made in his applications to the FSA about the control change and his former employment in the financial services industry. This case sends out a strong warning that the FSA will use all its powers, including criminal, against people who act in this way."
Evidence from the FSA's director of permissions, reporting and decisions, Graeme Ashley-Fenn, about the importance of our rules on change in control at regulated firms was also heard at court.
