In a statement released this morning, the QFC Regulatory Authority (QFCRA) said it has fined Mark Recardo, who was CEO for IFS based in the Qatar Financial Centre, US$70,000 and prohibited him from performing any controlled function or being employed by any firm in the QFC “owing to serious misconduct committed over a period of more than two years”.
It should be noted the fine is only payable if Recardo returns to work in Qatar.
The regulator said an investigation had found Recardo had “engaged in serious misconduct, including carrying out investment management activities, without appropriate client consent, that were outside the firm’s scope of authorisation” – something Recardo contests.
The QFC also claimed that he “knowingly circumvented the firm’s systems and controls to conduct these activities, and did not report the true nature of his conduct to the firm’s compliance department or to any member of the senior management team”. This again is a point the former CEO contests.
“Swept under the carpet”
In an email sent to the QFCRA and seen by International Adviser, Recardo said: “To make reference to carrying out investment management activities, without client consent, this is factually incorrect. All clients did provide consent prior to the pre-signed form being sent to the relevant provider.
“No life company allows for fund switching without the appropriate authority forms. The life companies involved will confirm that no fund switches could be taken or were taken without a client signature, but I do not believe they have ever been consulted during your investigation. I would suggest that this is a very important omission on your part.”
Recardo also pointed out that the vast majority of the clients were taken on prior to IFS obtaining a QFC license and prior to his appointment as CEO. He added: “This has been overlooked or should we say swept under the carpet.”
Recardo also hit back at his former employer, and said during the investigation he made the QFCRA aware of a “lack of compliance procedures at [IFS]”. He specifically highlighted the fact he was still able to access online client files, one year after he had left.
He added: “I believe the entire investigation has always been a predetermined outcome designed to discipline an individual who is no longer in Qatar or in the QFC and made it clear in interviews and calls has no intention of returning.”
Furthermore, Recardo pointed to a recent case where the QFCRA fined a former JP Morgan employee just US$20,000 for committing an act of fraud. He questioned how “a case of pure fraud can only receive a fine of $20,000, while my own case, which in [the QFCRA’s] own words ‘acknowledge were not driven by financial gain’ led to a $70,000 fine for online fund switches”.
He then challenged the QFCRA to comment on this “obvious difference in punishment”.
A quote from QFCRA CEO Michael Ryan in the regulator’s statement on the case said: “These individuals occupy a position of trust and they must adhere to the rules and regulations that are designed to protect consumers, investors, and the integrity of the Qatar Financial Centre.”
In response Recardo said: “Surely this should also apply to the enforcement department to also protect individuals working in the QFC framework; that findings are documented accurately and without prejudice and not with an agenda for a decent headline.”