Kleinwort fined pounds 30,000 by SFA

Click to follow
The Independent Online
Kleinwort Benson Securities has been reprimanded, fined pounds 30,000 and ordered to pay pounds 7,900 in costs to the Securities and Futures Authority (SFA), the City regulator, after admitting to failures in its internal controls.

Alistair Truelove and Philip Steel, two former registered representatives of the firm, were disciplined for mismarking positions which resulted in Kleinwort showing a paper loss of approximately pounds 500,000.

And, in two unconnected cases, one current employee and one former employee of Merrill Lynch International Bank, the private banking operation of the US bank, have been fined and reprimanded by the SFA.

In Kleinwort's case, Mr Truelove, a manager and trader in European convertible notes, was reprimanded, fined pounds 7,500 and required to pay pounds 3,000 towards the SFA's costs.

Mr Steel, who worked as Mr Truelove's assistant, was reprimanded and required to pay pounds 2,000 towards costs. He was not fined because the SFA said it had taken into account that at the time he was only in his mid- 20s, had been working in the back office at Kleinwort and had no experience in trading convertible notes and warrants.

The SFA said Mr Truelove and Mr Steel adopted a practice of marking positions on the European convertibles and warrants book which was neither in accordance with the SFA's rules nor with Kleinwort's own mark to market policy between 1 July 1995 and the beginning of September 1995.

The consequent mismarking of positions concealed "substantial, though unrealised, losses" on Kleinwort's profit and loss account, the regulator said.

A spokesman for Kleinwort Benson said the firm had spotted the problem and reported it to the SFA.

In the actions taken against the Merrill Lynch staff, the SFA said Melville Ipe, who is still a registered representative of the bank, was fined pounds 7,500, reprimanded and required to pay pounds 7,500 towards the SFA's costs for selling a product to a customer which was unsuitable.

Tanvier Malik, a former registered representative, was fined pounds 15,000 and required to pay pounds 5,000 towards costs after providing incomplete valuation reports to a private customer.