The UK’s financial regulator has issued a multimillion-pound fine to a London-headquartered stock broker after the latter failed to crack down on fraudulent trading and money laundering.
TJM Partnership is now in voluntary liquidation after becoming embroiled in the business dealings of failed funeral plans provider Safe Hands, which recently collapsed owing customers millions.
The Financial Conduct Authority (FCA) claimed the broker failed to adequately police suspect trades or apply money laundering policies related to trading on behalf of offshore clients of the Solo Group between January 2014 and November 2015.
It said it found evidence of circular trading, a type of securities fraud linked to price manipulation. For the £59bn in Danish equities and £20bn in Belgian equities it traded, TJM apparently received a commission of £1.4m.
“TJM allowed itself to become involved in a self-evidently suspicious scheme of circular transactions that looked like shams,” said FCA executive director of enforcement and market insight, Mark Steward.
“TJM demonstrated a complete lack of care and diligence in participating in these transactions of dubious purpose.”
Separately, the FCA flagged other failings at TJM, related to financial crime and money laundering risks linked to Solo Group. It claimed to have found evidence of transactions made with no economic purpose other than to transfer windfall profits of €4.3m (£4.4m) among clients. The regulator said TJM also accepted money from a third party without conducting due diligence.
This is the third and largest FCA fine to date related to “cum-ex” trading, which is designed to exploit differences in tax laws across Europe, and which reports claim has cost governments across the region billions.
TJM agreed to resolve all issues of fact and liability in the case, meaning it received a 30% discount on the FCA fine.