Topic: FCA fines Sunrise Brokers LLP £642,400 for serious financial crime control failings in relation to cum-ex trading.
Subject of Enforcement: Sunrise Brokers LLP
Date of Notice: 12/11/2021.
Overview: This is the second case brought by the FCA in relation to cum-ex trading, dividend arbitrage and withholding tax (WHT) reclaim schemes. The first FCA case relating to cum-ex trading concluded in May 2021.
The FCA found that Sunrise had deficient systems and controls to identify and mitigate the risk of facilitating fraudulent trading and money laundering in relation to business introduced by the Solo Group, between 17 February 2015 and 4 November 2015.
On review it was found that the Solo trading throughout the period was characterised by a circular pattern of purported trades – characteristics which are highly suggestive of financial crime. The trading appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium.
In particular, in 2 instances the firm failed to identify or escalate any potential financial crime concerns or suspicions when it should have done, where:
Sunrise executed a trade on behalf of a broker client, introduced by the Solo Group, at nearly twice the prevailing market price of the stock. Sunrise accepted a payment from a UAE-based entity connected to the Solo Group in respect of outstanding debts owed to them by clients of Solo.
Mark Steward, Executive Director of Enforcement and Market Oversight, said: ‘Sunrise should not have carried out these self-evidently suspicious trades without proper due diligence. Sunrise’s failings were significant and this outcome demonstrates we will not tolerate firms lax controls and that we will work with overseas agencies to ensure London is not viewed as a haven for poor controls and practices.’
Penalty: Fine of £642,400
Topic: Final Notice 2021
Subject of Enforcement: Colin Bermingham
Date of Notice: 27 September 2021, published
Overview: Mr Bermingham was convicted on 28 March 2019 of one count of conspiracy to defraud relating to EURIBOR submissions made at Barclays under his supervision and was sentenced on 1 April 2019 to 5 years imprisonment.
it appears to the Financial Conduct Authority that Mr Bermingham is not a fit and proper person to perform any function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional firm. His conviction demonstrates clear and serious dishonesty and a lack of integrity such that he is not fit and proper to perform functions in relation to regulated activities.
In reaching this decision, the Authority has had regard to all relevant circumstances, including: the relevance and materiality of the offence; the fact that Mr Bermingham has been convicted of an offence of dishonesty concerning financial crime and market manipulation; the fact that the offence was committed whilst he was approved as an individual by the Authority; and the severity of the risk posed by Mr Bermingham to consumers and financial institutions, and to confidence in the market generally.
Penalty: Prohibited from performing any function in relation to any regulated activity
Original Notice: https://www.fca.org.uk/publication/final-notices/colin-bermingham-2021.pdf