The true lessons of the Alberto Micalizzi fine
Peter Moore, head of regulation at The IMS Group, comments on the decision by the UK’s Financial Services Authority to impose a £3m fine on Alberto Micalizzi, chief executive of London-based hedge fund Dynamic Decisions Capital Management, and on what this decision does and doesn’t mean.
The news that the UK securities regulator has fined a hedge fund “boss” or “chief” such an enormous sum and banned him from the profession is certainly the biggest story of its type since the similar instance from August last year involving Michiel Visser, chief executive of Mercurius Capital Management, who was fined £2m and also struck off by the FSA.
The FSA has banned him from performing any role in UK regulated financial services, and has also cancelled the licence of DDCM. Micalizzi and DDCM have referred this matter to the Upper Tribunal, which may uphold, vary or cancel either or both of the FSA’s decision.
So what are some of the true lessons of such decisions – is the FSA getting tougher on the founders, owners and registered representatives of authorised investment firms?
Not necessarily. This is clearly a huge fine for an individual, one that the FSA has curiously chosen to market as its largest ever in a non-market abuse case. Although, it will pale into insignificance as compared with the losses suffered by the fund’s investors.
Furthermore, in reading the FSA’s findings and its related comments, one is not struck by a (pos-financial crisis) sense of neopuritanism on the part of the FSA, as the FSA’s assessment was that “Micalizzi’s conduct fell woefully short of the standards that investors should expect, and behaviour like his has no place in the financial services industry.”
It is also worth noting that the Micalizzi case was one of misfeasance, or wilful wrongdoing, which is to be compared with the FSA’s recent unsuccessful attempt to hold a senior UBS executive culpable for nonfeasance, a failure to adequately manage and control his team.
The FSA certainly has the desire to hold senior staff vicariously liable in such failure to control situations. However, this may require a rule change to enable it to do so.