SEI Investments (Europe) Limited (SEI) has become the latest corporation to be fined by the Financial Conduct Authority (FCA) for regulatory breaches. The failings involved in this case related to the protection of client money.
Under the FCA’s client money rules, firms are required to keep client money separate from the firm’s money in client bank accounts with trust status. Firms that undertake client transactions and hold client money should perform daily client money calculations (referred to in the FCA Client Asset Sourcebook (CASS) rules as internal reconciliations) to check that they are segregating the correct amount of client money so that in the event of the firm’s insolvency, client money is returned to clients as quickly and easily as possible.
According to the FCA, between November 2007 and October 2012, SEI – a provider of asset management and wealth management services – failed on several occasions to perform its internal reconciliations, failed on several occasions to ensure that any shortfall or excess identified in its internal reconciliation of client money was paid into or withdrawn from the client bank account by close of business on the day of the internal reconciliation, and failed to appreciate that it was using a non-standard method of internal reconciliation. SEI therefore failed to ensure that it maintained its records and accounts in a way that ensured their accuracy.
Failings were found throughout SEI’s client money processes, says the FCA, indicating that SEI’s client money arrangements were inadequate. The company was fined £900,200.
The FCA stresses that SEI co-operated with it during its investigations, obtained independent advice and has since restructured its operational model. In addition, although its failings were considered to be serious, they did not result in actual loss of client money.
SEI agreed to settle at an early stage and in doing so it qualified for a 30% discount. Without the settlement discount, the fine would have been £1,286,000.
Contact Lewis Nedas’ Criminal Lawyers in London
If your organisation is being investigated by the FCA and you require specialist legal advice please contact our solicitors Jeffrey Lewis or Siobhain Egan on 020 7387 2032 or complete our online enquiry form here.
This blog post is intended as a news item only – no connection between Lewis Nedas and the parties concerned is intended or implied.