On May 21, the Upper Tribunal (Tax and Chancery Chamber) published related decisions upholding the Financial Services Authority’s decision notices imposing fines and bans on both Sachin Karpe and Laila Karan.
Mr. Karpe and Ms. Karan, former advisers in the international wealth management division of a leading investment bank, had both referred FSA decision notices to the Tribunal relating to penalties imposed for their involvement in unauthorized trading. The FSA had decided to:
- Fine Mr. Karpe £1.25 million (approximately $2 million) for breaches of the FSA’s Statements of Principle for Approved Persons and to ban him from performing any role in regulated financial services on the grounds that he was not a fit and proper person as his conduct demonstrated a lack of honesty and integrity.
- Fine Ms. Karan £90,000 (approximately $140,000) for breaches of the FSA’s Statements of Principle and to ban her from performing any role in regulated financial services on the grounds that she was not a fit and proper person as her conduct demonstrated a lack of honesty and integrity.
Tracey McDermott, acting director of enforcement and financial crime, said: “Karpe exploited and abused his position of trust, and persuaded more junior employees to engage in misconduct to assist him. Such behaviour is in breach of his obligations to his employer, his clients and his colleagues as well as to the regulator. It has no place in the financial services industry. We welcome the Tribunal’s confirmation that as well as banning Karpe, a significant financial penalty should also be imposed. This sends a clear message of the consequences of such behaviour.
“Karan sought to categorise herself as a victim in this matter. The Tribunal (as had the FSA) recognised that she did not initiate the misconduct, and was placed in a difficult position by Karpe. However, the findings and the resulting sanctions send a clear message that an approved person must take responsibility for their own actions. Where an approved person is aware that colleagues are engaging in misconduct, we expect them to blow the whistle, not to become involved themselves.
“Those who take on the responsibility of being an approved person should be in no doubt about our commitment to take the strongest action to tackle behaviour which falls below the high standards we expect.”