Regulating Body FCA Prohibits High-Ranking Employee from H20 AM Firm

In a series of recent actions, the Financial Conduct Authority (FCA) has taken stern measures against several individuals in the financial services industry for various forms of misconduct.

Jonathan Frensham, also known as Jonathan Hunt, has been banned from financial services by the FCA. The ban follows Frensham's conviction in March 2017, though the specific crime is not disclosed.

Leigh Mackey, another industry professional, has faced a more severe penalty. The FCA has not only banned him from working in financial services but also imposed a fine of £1,102,879. Mackey's misconduct occurred between unspecified dates, but it involved misleading the FCA and misusing funds due to insurers.

The misconduct by Mackey primarily affected clients in the construction sector, as his actions have called into question the coverage for these clients.

The FCA's crackdown on misconduct extends to senior industry figures. Steve Smart, joint executive director of enforcement and market oversight, emphasised the need for senior leaders in financial services to act with integrity.

The former deputy CEO of H2O AM LLP, Jean-Noel Alba, is another individual who has faced the FCA's wrath. Alba was fined £1,049,500 and banned from the financial services industry. The FCA investigated Alba for misconduct related to providing false and misleading statements and documents during its probe into H2O's high-risk investments.

Between August 2019 and July 2021, Alba deliberately misled the regulator by asking colleagues to fabricate meeting minutes where no formal meetings had occurred. His behavior breached several FCA principles and conduct rules, demonstrating a lack of integrity and failure to cooperate openly with the regulator.

The FCA's investigation into H2O followed market concerns emerging in 2019 over the firm's investments in illiquid bonds linked to companies owned by German entrepreneur Lars Windhorst. These concerns caused substantial investor redemptions and led to an FCA probe into H2O's due diligence failures on risky investments between 2015 and 2019.

H2O subsequently paid €250 million to investors trapped in its funds and shut its UK regulated operations in 2024 to resolve related issues. During the FCA investigation, Alba was the main point of contact, which underscored the seriousness of his misleading conduct.

The FCA explicitly noted Alba's failure to act with integrity under Statement of Principle 1 and Individual Conduct Rule 1, and his lack of openness under Statement of Principle 4 and Individual Conduct Rule 3. The regulator concluded that Alba was not a fit and proper person to hold a significant role in financial services.

Lastly, the FCA has banned Mr Ari Harris from working in financial services due to his conviction of inflicting grievous bodily harm without intent. The specific details of Harris's crime involve stabbing a man twice in the neck, for which he was sentenced to three years in prison.

These actions by the FCA serve as a reminder of the importance of integrity and compliance in the financial services industry. Senior figures must set an example, and all professionals must adhere to the principles and conduct rules set forth by the regulator to maintain trust and confidence in the industry.

[1] FCA Press Release: H2O AM LLP and Jean-Noel Alba - Final Notice (https://www.fca.org.uk/news/statements/h2o-am-llp-and-jean-noel-alba-final-notice) [2] FCA Press Release: Leigh Mackey - Final Notice (https://www.fca.org.uk/news/statements/leigh-mackey-final-notice) [3] FCA Press Release: Jonathan Frensham - Final Notice (https://www.fca.org.uk/news/statements/jonathan-frensham-final-notice) [4] FCA Press Release: Ari Harris - Final Notice (https://www.fca.org.uk/news/statements/ari-harris-final-notice) [5] The Telegraph: H2O AM fined £1.3m over Windhorst investments (https://www.telegraph.co.uk/business/2021/02/03/h2o-am-fined-13m-windhorst-investments/)