Italian hedge fund manager fined £3m by UK FSA

The UK Financial Services Authority (FSA) has fined Italian hedge fund manager Alberto Micalizzi £3m and banned him from performing any role in regulated financial services.

The fine is the largest decided by the FSA for an individual in a non-market abuse case.

Micalizzi, former chief executive of London-based hedge fund company Dynamic Decisions Capital Management, is accused of having caused losses of more than $390m, about 85% of his hedge fund Dynamic Decisions Capital Management (DDCM), following the collapse of Lehman Brothers in 2008.

In a release, the FSA explained that in late 2008, to conceal the losses, Micalizzi lied to investors about the true position of the fund and entered into a number of contracts for the purchase and resale of a bond, which was not a genuine financial instrument.

The bond contracts were deliberately undertaken by Micalizzi to create artificial gains for the fund: units of the bond were sold to the fund at a deep discount to their face value, and then valued by the fund at approximately their face value when reporting to investors.

Micalizzi used at least $7.5m of the fund´s money in relation to the bond contracts, and despite the losses suffered he continued to seek new investors.

Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said: “Those managing investments are in positions of trust and significant responsibility. Although investing in hedge funds can carry greater risk than many other asset classes, investors in funds controlled by regulated hedge fund managers are entitled to be treated with exactly the same honesty and integrity as other firms.

“Alberto 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 and we are committed to tackling it wherever we find it.”

Micalizzi and DDCM have referred this matter to the Upper Tribunal, which will have to determine the appropriate action for the FSA to take.

The manager is currently under investigation by Milan’s public attorney.

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