The Financial Conduct Authority (FCA) has today fined Mothahir Miah, a former Investment Analyst at Aviva Investors Global Services Limited (Aviva Investors), £139,000 and banned him from performing any function in relation to any regulated activity in the financial services industry for failing to act with honesty and integrity.
At Aviva Investors Mr Miah had authority to trade on behalf of hedge and long-only funds. Between January 2010 and October 2012, Mr Miah exploited weaknesses in the trading systems and controls at Aviva Investors in order to delay the booking and allocation of trades.
This meant Mr Miah was able to assess the performance of a trade during the day and allocate trades which had benefitted from favourable price movements to hedge funds that paid performance fees and trades that had not benefited to certain long-only funds that paid lower or no performance fees. This abusive practice is known as “cherry picking”.
Mark Steward, Director of Enforcement at the FCA said:
“Mr Miah abused the trust given to him by his clients in a very clear and deliberate way. It is vital that Approved Persons operate with honesty and integrity at all times. Mr Miah did not.
“We have taken into account that Mr Miah admitted his misconduct at a very early stage to both Aviva Investors and the FCA and showed remorse for his actions.”
Aviva Investors’ policies required Mr Miah to book details of each trade, including the amounts to be allocated to specified funds, into an online system within 15 minutes of trading on behalf of long-only funds. When trading on behalf of a hedge fund, Mr Miah was required to report the details of the trade within an hour of the trade being executed.
The FCA found that Mr Miah deliberately delayed the booking and allocating of trades on a regular basis by several hours. This allowed him to cherry pick on numerous occasions.
Mr Miah knew that cherry picking was wrong, but was motivated by a desire to prove his trading ability to his colleagues and increase his prospects of being promoted. This is because the culture within the Fixed Income business was heavily focused on performance and promotions tended to be based on reported investment performance. However, neither Mr Miah’s motivation nor the culture in the business excuse his cherry picking in any way.
Mr Miah’s actions contributed to Aviva Investors having to pay significant compensation to a number of long-only funds. The FCA fined Aviva Investors £17.6 million in relation to its failings on 24 February 2015.
Mr Miah agreed to settle at an early stage of the FCA’s investigation and therefore qualified for a 30% (Stage 1) discount. Were it not for this discount, the financial penalty would have been £198,600.
The financial penalty would have been higher had it not been for Mr Miah’s very early admissions and level of co-operation. Mr Miah’s early admissions and expression of remorse also mean that the FCA is minded to revoke Mr Miah’s ban from performing any regulated activity after five years upon his application.
Notes to editors
- The Final Notice for Mr Miah[1].
- The Final Notice[2] and Press Release[3] for Aviva Investors.
- On 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers, to protect and enhance the integrity of the UK financial system, and to promote effective competition in the interests of consumers.
- You can find more information about the FCA[4], as well as how it is different to the PRA.