The UK’s Financial Conduct Authority (FCA) has decided to ban and fine Angela Burns, the former non-executive director, GBP154,800 for not disclosing her conflicts of interest.
Burns has referred the matter to the Upper Tribunal (the Tribunal) where she and the FCA will each present their case. The Tribunal will then determine the appropriate action for the FCA to take. The Tribunal may uphold, vary or cancel the FCA’s decision. The Tribunal’s decision will be made public on its website.
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The Decision Notice, which reflects the FCA’s view of what occurred and how the behaviour is to be characterised, states that the FCA has decided to fine Burns GBP154,800 and ban her from performing any role in regulated financial services for failing to act with integrity as a non-executive director (NED) at two mutual societies by failing to disclose her conflicts of interest.
In 2006, Burns completed a consultancy project for a US based investment manager. Shortly after she completed this project Burns asked the investment manager for the opportunity to turn her proposal into a UK business. The investment manager did not take her up on her proposal but she stayed in touch with them.
In September 2008, Burns put forward a proposal outlining the consultancy work she could perform for the investment manager.
In January 2009 and May 2010, Burns became a NED and chair of the investment committee for two UK mutual societies. Upon taking up her NED positions Ms Burns notified the investment manager of her new roles and renewed her request for consultancy work.
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By GlobalDataBurns did not tell the mutual societies that she was at the same time trying to obtain work from the investment manager and, in the FCA’s opinion, attempted to use her NED positions to benefit herself when she emailed the investment manager on:
– On 24 February 2009, notifying it of the potential business opportunity at one of the mutual societies and in the same email reminded the investment manager of her interest in obtaining consultancy work and a NED position from the investment manager;
– On 26 February 2009, reminding it of the potential business opportunity at one of the mutual societies and in the same email asked the investment manager to consider her for a role as a NED; and
– On 5 November 2010, reminding the investment manager of her 2008 proposal.
During Burns’ tenure as NED and chair of the investment committees at both mutual societies, one mutual society placed a GBP350 million mandate, and the other was considering placing a GBP750 million mandate with the investment manager.
In the FCA’s opinion, Burns had a duty to disclose her interest in seeking consultancy work from the investment manager to her fellow mutual societies’ directors. Burns made no such disclosure. In the FCA’s view, Burns also attempted to use her NED positions to benefit herself.
In the FCA’s opinion, given the serious nature of these breaches, these failures demonstrate that Ms Burns lacked integrity.
Tracey McDermott, Director of Enforcement and Financial Crime, said:
"The position of NEDs is critical to the effective functioning of a board and to maintaining the confidence of customers. Because of the nature of their role, NEDs are more likely to have a portfolio of appointments and are likely to find themselves having to manage conflicts of interest more frequently than their fellow directors. NEDs need to manage scrupulously their conflicts of interest and to observe basic corporate governance principles."
Burns applied to the Tribunal for an order preventing the FCA from publishing the Decision Notice. This application was unsuccessful.
