FSA slaps hedge fund manager record £3 million fine
30 May 2012
The Financial Services Authority has slapped a record £3 million fine on a London hedge fund manager who it accused of lying to investors about "catastrophic losses."
Alberto Micalizzi, 43, whose $500 million Dynamic Decisions hedge fund went under in 2009, has also been barred for life from working in regulated financial services.
The FSA alleges that, after suffering over $390 million losses, in the wake of the collapse of Lehman Brothers, Micalizzi lied about the deficit and launched a phoney bond to cover its losses.
The bond, launched in 2008, allowed him to book a profit for the fund of over $400 million.
However, according to the FSA, the bond was, in regulatory parlance, "not a genuine financial instrument" – and had been launched purely to cover up the fund's losses.
According to the FSA, units of the bond were sold to the loss-making fund at a deep discount, to be later restated at their face value in the fund's accounts, thus creating a huge artificial profit.