SFA expels two from registers and fines third

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The Independent Online
The Securities and Futures Authority (SFA) has expelled two City individuals from its registers and fined and reprimanded a third in three unconnected cases.

One of the expelled was the head of a Swiss-owned firm, Gottex Financial Products, who used company money to repay personal loans, buy a car, pay for a musical recording, antiquarian books and a hotel bill, as well as expenses for another company in which he was involved.

The others worked for Goldman Sachs and Morgan Grenfell at the time they broke the SFA's rules.

Lawrence Peter Viet Bao Merrett has been thrown out by the regulator for breaking rules while he was an executive in Morgan Grenfell's acquisitions research team.

Mr Merrett was sacked by Morgan, a Deutsche Bank subsidiary, in July 1994 following the discovery that, contrary to in-house rules, he had been conducting "outside business interests" without the bank's permission.

He had provided false returns to his firm about these interests. On further investigation the SFA discovered that a number of County Court judgments for unpaid debts had been outstanding against him for some time. When the regulator required him to provide certain information and documents to its investigators, it said, "Mr Merrett failed to do so".

The regulator concluded: "Mr Merrett has therefore failed to comply with the criteria of honesty and financial integrity of SFA's 'fit and proper person' test and is no longer suitable to be registered."

Morgan Grenfell refused to comment.

In the second disciplinary case, Christopher Malcolm Pigden has been fined pounds 5,000 by the SFA plus costs of pounds 4,000 and given a reprimand.

Mr Pigden admitted that, when employed on the Eurobond desk at Goldman Sachs International, the US-based investment bank, he took deliberate steps to conceal a loss arising from the exercise of an option and instructed a member of staff to record the loss over a period of time.

Mr Pigden also admitted that he mismarked two options positions in not following this firm's policy regarding the daily marking to market of such positions.

The first offence broke SFA principles requiring "a person should observe high standards of integrity and fair dealing". The second broke the principle that "a person should act with due skill, care and diligence".

Mr Pigden left Goldman Sachs and joined Banque Paribas over a year ago. He left Paribas last week, and Paribas said yesterday "the parting was perfectly amicable".

In the third case the SFA expelled Arthur Simpson Reynolds, formerly the senior executive officer of Gottex Financial Products, a Swiss-owned firm. Mr Reynolds was asked to resign in December 1993 following the discovery of "irregularities in the use of the firm's money over a period of five months," according to the SFA.