Hedgie hits out at record fine
Hedge fund boss Alberto Micalizzi lashed out at the Financial Services Authority (FSA) last night, accusing it of demonising him after he was landed with a record £3m fine.
This is the biggest ever penalty for an individual in a case of non market abuse imposed by the City regulator. It also banned him from performing any role in regulated financial services and stripped the company he founded of its licence to conduct regulated business.
Micalizzi, 43, a professor of finance at Milan’s Bocconi University, says that he has documents “that prove no wrongdoing”. He has referred the decision to the Upper Tribunal, which has the power to overturn the FSA.
Micalizzi was chief executive of Dynamic Decisions Capital Management (DDCM) in 2008, when its master fund lost 85 per cent of its value, some $390m (£249m). On liquidation in 2009, its assets were estimated at $10m. Investors in the fund included RMF, part of Man Group.
The FSA alleges that Micalizzi lied to investors to conceal the losses – in one case receiving an investment of $41.8m after providing misleading information. It also alleges that he entered into bond contracts on behalf of the fund with companies “with no identifiable track record in the financial services or commodity trading industries” despite knowing that the bond was fraudulent.
According to the FSA, Micalizzi, who has a PhD in finance from Imperial College, claims that he believed the bond to be genuine and “may have been exploited by others due to his lack of experience”. However, the FSA found “the premise and structure of the bond, as well as the purported profits, were obviously implausible. The related documentation appeared on its face to lack authenticity.”
A statement from Micalizzi’s lawyer argues that the decision notice against him paints an “artificial” picture, noting that the Serious Fraud Office dropped its criminal probe in 2010 because of a lack of evidence.
The FSA’s power to publish decision notices before the Upper Tribunal makes a final judgement is controversial. In April this year, the decision notice against Ian Hannam of JP Morgan led to his resignation and its release was criticised by some.
However, the cases were different. The FSA’s Regulatory Decisions Committee stated Hannam “did not act without honesty or integrity”, while the FSA ruled that Micalizzi is not fit and proper. Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said: “Alberto Micalizzi’s conduct fell woefully short of the standards that investors should expect and behaviour like his has no place in the financial services industry.”