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Alternative Market Briefing

UK FSA issues record £3m fine against hedge fund boss

Wednesday, May 30, 2012

Bailey McCann, Opalesque New York: The Financial Services Authority (FSA) in the UK has banned Alberto Micalizza, manager of London-based Dynamic Decisions Capital Management from conducting regulated financial business and fined him £3m for failing to run his business prudently. The regulator has also stopped the fund itself from conducting business. The hedge fund racked up millions in losses during the credit crisis and the fine is a record for a penalty given to an individual in a non-market abuse case.

According to the FSA, Micalizza lied to investors in order to hide his extensive losses of more than $390m almost 85% of the total value of his fund. According to a Reuters investigation, the fund's main investment was $500m in highly illiquid bonds issued by a company in a trailer-park suburb of Phoenix, Arizona by someone on the run from authorities in the US.

Micalizzi is also charged with the purchase and resale of a batch of fake bonds. In its decision notice, the regulator stated that "the bond was not a genuine financial instrument and that Micalizzi was aware of this when he entered into the contracts," and that he did this to falsely counterbalance his growing losses and post a monthly profit.

In an emailed statement to Financ......................

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