SLS and Lifemark products
In its decision, the FCA said Keydata Investment Services (Keydata) designed and sold investment products to retail investors via IFAs, which were underpinned by investment in bonds issued by two Luxembourg special purpose vehicles called SLS Capital S.A (SLS) and Lifemark S.A (Lifemark). In turn SLS and Lifemark invested in portfolios of life settlement policies.
The FCA found that Johnson had failed to act when he received complaints that Keydata’s financial promotions were unclear and misleading.
Keydata had been advised that its due diligence was inadequate, and the Lifemark and SLS portfolios, which underpinned Keydata’s investments into life settlement policies, was underperforming.
“[Johnson] recklessly failed either to take adequate steps to ensure that Keydata addressed the issues and risks that had been identified in relation to the Lifemark Products… despite becoming increasingly aware of the severe risks affecting the Lifemark Portfolio,” said the FCA’s final report.
Delibrately misleading
Instead, he repeatedly lied, telling the regulator that there had never been a problem with the income payments on the SLS of Lifetime products.
In fact, Johnson knew there was considerable doubt about whether SLS would make income payments and of the severe liquidity and other risks with the Lifemark Portfolio.
“The Authority considers that Mr Johnson’s failings in this regard are of the most serious nature in light of the significant level of consumer detriment which has arisen from the sales of the products and the impact which this level of consumer detriment has had on the financial services sector,” said the FCA.
