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Bans and fines imposed for ‘lack of integrity’

Two Surrey-based investment advisers have been fined a total of £885,000 and been banned by the Financial Conduct Authority (FCA) from holding any position at a financial firm after they were found to have lacked integrity and misled clients.

The case highlights that fact that the regulator will crack down on behaviour that it believes harms the integrity of the UK’s financial systems.

The men involved, Mark Bentley-Leek and Mustafa Dervish, were both directors of Bentley Leek Financial Management. The FCA found that between 5th March 2004 and 23rd November 2010, the two men advised over 300 customers to invest over £35m in a series of property developments in the UK and abroad. Despite the riskiness of the investments they were selling, the pair told some of their clients that their money and a 6%-18% return on the investment was guaranteed. Some investors were told that returns of up to 50% could be expected.

Bentley-Leek and Dervish were also found to have failed to adequately inform investors that they were directors and owners of some of the property development companies they were advising clients to invest in, which created a conflict of interest.

By June 2009 both men were aware that the property investment companies were in difficulty, with the market falling and bank lending seizing up. Despite that they continued to advise clients to invest. Within 17 months, however, Bentley Leek Financial Management was in administration and had entered insolvency by November 2011.

Despite the promise of guaranteed returns, most of those who invested during this period are likely to suffer substantial losses, says the FCA. The Financial Services Compensation Scheme is currently considering whether those affected may be entitled to some compensation.

Bentley-Leek and Dervish have been fined £525,000 and £360,000 respectively, substantial fines for individuals which reflect the seriousness of the breaches and the need to deter others. The fines would have been £750,000 and £450,000 respectively had Bentley-Leek and Dervish not settled at an early stage of the Authority’s investigation.

The two men have been banned from holding any position at a financial firm and the FCA has also cancelled the permissions of Bentley-Leek Financial Management, which is now in liquidation.

Contact Jonathan Fisher QC

For specialist advice on issues of corporate, regulatory or financial crime, contact Jonathan Fisher QC on +44 (0)20 7427 463 or click here to make an electronic enquiry.

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The views expressed in this article represent those of the author and not Bright Line Law.

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