"Between January 2010 and October 2012, Mr Miah exploited weaknesses in the trading systems and controls at Aviva Investors in order to delay the booking and allocation of trades."
Published : 17/11/2015
Source: fca.org.uk
OPERATIONAL ISSUES
1. The Investors’ policies required analyst to book details of each trade and amounts to be allocated to specified funds into an online system within 15 minutes of trading on behalf of long-only funds.
2. For analyst trading on behalf of a hedge fund, the analyst was required to report the details of the trade within an hour of the trade being executed.
3. The perpetrator deliberately delayed the booking and allocating of trades on a regular basis by several hours.
4. This allowed him to "cherry pick".
5. By delaying the bookings, the perpetrator was able to assess the performance of a trade during the day.
6. Subsequently he allocate trades which had benefited from favourable price movements to hedge funds that paid performance fees.
7. Trades with unfavourable price movements were allocated to certain long-only funds that paid lower or no performance fees.
8. Situational Pressure and Incentives would be the main fraud indicator as there were strong needs the fraudster was trying to satisfy.
"Mr Miah knew that cherry picking was wrong, but was motivated by a desire to prove his trading ability to his colleagues and increase his prospects of being promoted. "
"The culture within the Fixed Income business was heavily focused on performance and promotions tended to be based on reported investment performance. "
FINES IMPOSED
1. The FCA fined Aviva Investors £17.6 million in relation to its failings on 24 February 2015.
2. The prepetrator agreed to settle at an early stage and qualified for a 30% (Stage 1) discount.
3. Mothahir Miah was fined £139,000 and banned from performing any function in relation to any regulated activity in the financial services industry.
