Hedge fund 'liar' Alberto Micalizzi fined record £3m and banned

 

A London hedge fund manager accused by the Financial Services Authority of lying to investors about "catastrophic losses" has been fined a record £3m by the watchdog.

Alberto Micalizzi, 43, whose $500m (£318m) Dynamic Decisions hedge fund collapsed in 2009, has also been banned for life from working in regulated financial services.

The FSA alleges that, following more than $390m of losses in Dynamic's fund after the collapse of Lehman Brothers, Mr Micalizzi lied about the deficit and launched a phoney bond to cover its losses.

The bond was launched in 2008 and allowed him to book a profit for the fund of more than $400m.

But the FSA claims the bond was, in regulatory parlance, "not a genuine financial instrument" – and was set up purely to cover up the fund's losses.

Specifically, the FSA claims units of the bond were sold to the loss-making fund at a deep discount, then re-stated at their face value in the fund's accounts, creating a huge artificial profit.

That gave the impression that the fund was healthy, enabling Mr Micalizzi to keep attracting new investors. One put in $41.8m in December 2008. The fund was liquidated five months later and the bonds have proved impossible to sell – effectively worthless, according to Reuters.

Tracey McDermott, the FSA's acting enforcement director, said: "Alberto Micalizzi's conduct fell woefully short of the standards investors should expect and behaviour like this has no place in the financial services industry."

The FSA also said Mr Micalizzi repeatedly provided it with false and misleading information.

He is appealing against the finding and seeking to get it overturned at a tribunal. In a lengthy rebuttal statement condemning the "desperate" regulator, his lawyers said: "The picture painted by the FSA ... is artificial." It said Mr Micalizzi may have himself been the victim of an elaborate fraud.

The FSA originally referred the case to the Serious Fraud Office but the police dropped the probe a few months later, leading the City watchdog to pick it up again to pursue a civil action. One lawyer specialising in such cases said: "This is what happens time and again: the FSA sends cases to the police but they fail to act. The FSA then gets so frustrated that it takes back the case and prosecutes it as a civil matter."

Mr Micalizzi studied at Imperial College, London, where he took a doctorate in finance. He went on to hold a research position at Milan's Bocconi business university. The college said he had "suspended himself" last year.

One researcher who dealt with Mr Micalizzi in 2007 said the "charming and chatty" financier stressed his close links to Imperial College due to the extremely mathematical nature of the fund's strategy. Dynamic Decisions was based near Imperial in South Kensington and the researcher said Mr Micalizzi claimed he and his business partner Dr Nicos Cristofides, an Imperial professor, used the university's powerful computers for its calculations.

Other directors included Michael Nobel, a descendent of the founder of the Nobel Prize. Mr Nobel has said he was not kept abreast of the true situation at the fund.

Reuters found that the Micalizzi bond was actually issued by a company in a trailer park suburb of Phoenix, Arizona, on behalf of a small Australian commodities firm. It was supposedly backed by $10bn worth of diesel from the Russian republic of Bashkortostan.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
people
Life and Style
President Obama, one of the more enthusiastic users of the fist bump
science
Arts and Entertainment
Peter Griffin holds forth in The Simpsons Family Guy crossover episode
tv
Life and Style
Upright, everything’s all right (to a point): remaining on one’s feet has its health benefits – though in moderation
HealthIf sitting is bad for your health, what happens when you stay on your feet for a whole month?
News
Kristen Stewart and Rupert Sanders were pictured embracing in 2012
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Java Developer - Banking - London - Up to £560/day

£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

HR Business Analyst, Bristol, £350-400pd

£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

Account Manager - (Product & Account Management, Marketing)

£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried