Traders disciplined by SFA over unauthorised account

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The Independent Online
THE SECURITIES and Futures Authority has disciplined three securities traders for rule-breaking, two of them for operating an unauthorised sharedealing account.

David Todd, formerly a senior trader at City Index, has been fined pounds 10,000 plus pounds 2,550 costs and severely reprimanded. David Smith, formerly with Refco Overseas, was fined pounds 5,000 with pounds 2,550 costs and reprimanded.

Mr Todd was a senior trader at City Index when, to get around its personal account dealing rules, he arranged to use Mr Smith's own account for personal dealing. Mr Todd gave Mr Smith a half share of the profits and losses arising from any trades he carried out through the account.

The scheme started in 1990 and lasted until the autumn of 1993. Mr Todd often booked trades to Mr Smith's account without his knowledge, according to the SFA.

Mr Smith was sacked in October 1993 as the scheme breached his contract of employment. Mr Smith was also in breach of his contract with Refco Overseas by not informing them that he had an account at City Index and failing to get permission for the trades before or after they were made. Mr Smith was also sacked.

In a separate case the SFA fined John Veglio pounds 5,000 plus pounds 5,950 costs for causing his employers, Lehman Brothers Securities, to break financial resources rules by mis-marking his book.