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During the last quarter of the year, the, UK, US and European regulators have been active on the market abuse front. The FCA have been working on increasing criminal market abuse penalties and in the EU, we saw the publication of the review of all national competent authorities (NCAs) market abuse sanctions in 2020 by ESMA. This report highlighted that the number of administrative sanctions in 2020 increased to 541, almost double the number of sanctions in 2019. Administrative sanctions may include withdrawal of an investment firm’s authorisation, and a permanent ban of persons from holding managerial functions within investment firms amongst other measures.

The SEC started the month of December filing charges against four persons on the grounds of insider trading, dating back to 2016. The founder of a manufacturing company is being accused of tipping off his friends with confidential information concerning the company’s merger negotiations. The traders profited from dealing in shares and out-of-the-money call options in the name of the company being acquired, based on material non-public information. Following the public announcement of the merger, the price of the shares and options purchased by the traders increased, realising profits exceeding $325,000. In their detailed complaint, the SEC refers to the e-communications between the accused traders and their brokerage firm.

The SEC’s historic focus has been on filing complaints against market abuse perpetrators and ensuring that regulated firms retain their employees’ e-communications, but we have recently seen how there is scrutiny of inadequate supervision of digital communications by regulated firms. JP Morgan Chase & Co. is expected to settle a fine of $200 million with the SEC and CFTC by the end of 2021. The financial services firm has reportedly failed a regulatory investigation over the monitoring of its employees’ communications. The supervision of digital communications includes any work-related emails, telephone calls and messages, both from personal and company devices.

Earlier last month, a new regulation by the UK’s HM Treasury came into effect, increasing the maximum sentence for conviction on indictment for insider dealing and financial services offences. This regulation brings the maximum charge for market abuse violations in-line with the maximum charge for other economic crimes, including fraud or bribery. Thus, the maximum sentence for serious market abuse crime will increase from seven to ten years. The rationale behind this more severe measure is that the UK Government holds the gravity of market abuse offences as equivalent to other economic crimes. This policy also aims to reduce instances of market abuse by delivering a message to potential perpetrators that they will be held accountable for their wrongdoings.

GRSS provides outsourced surveillance services through the clients’ preferred compliance systems. For more details about how your firm can benefit from ongoing monitoring of transactions and electronic communications, in addition to ensuring resilient management of your surveillance systems, kindly contact Sarah Donnelly on [email protected]

Source: SEC Charges Former Linear Technology Corporation Officer and Three Others with Insider Trading. https://www.sec.gov/litigation/litreleases/2021/lr25275.htm

SEC Complaint: United States Securities and Exchange Commission, Plaintiff, v. Robert C. Dobkin, Cynthia Braun, Michael Fiorillo and Jeffrey S. Gregersen, Defendants. https://www.sec.gov/litigation/complaints/2021/comp25275.pdf

The Financial Services Act 2021 (Commencement No. 3), Regulations 2021 https://www.legislation.gov.uk/uksi/2021/1173/pdfs/uksi_20211173_en.pdf

HM Treasury Financial Services Bill Impact Assessment https://publications.parliament.uk/pa/bills/cbill/58-01/0200/FS%20Bill%20Impact%20Assessment%20-%20October%202020%20-%20201020.pdf

ESMA publishes its 2020 Annual Report on the EU market abuse sanctions https://www.esma.europa.eu/press-news/esma-news/esma-publishes-its-2020-annual-report-eu-market-abuse-sanctions

ESMA Report: Administrative and criminal sanctions and other administrative measures imposed under the Market Abuse Regulation in 2020https://www.esma.europa.eu/sites/default/files/library/esma70-156-4673_annual_report_on_mar_administrative_and_criminal_sanctions_2021.pdf

JPMorgan set to pay $200 mln fine over staff communications lapse – Bloomberg News https://www.reuters.com/business/finance/jpmorgan-set-pay-200-mln-fine-over-staff-communications-lapse-bloomberg-news-2021-12-10/

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Nicholai Cumbo
Surveillance Analyst

Nicholai previously held the position of Senior Risk Officer at ACA Mirabella, where he was responsible for on-boarding clients, managing relationships and reviewing clients’ investment processes, risk management processes, strategy complexity, and operational arrangements. He was also responsible for compiling and submitting data for Regulatory Reporting. 

After graduating with a B.Sc. in Mathematics and Physics, he transitioned to finance, by completing a post graduate certificate in the Mechanics of Risk Management. He followed this up by sitting for the FRM and became a Certified Financial Risk Manager.

Eliz

Elizabeth Mallia
Surveillance Analyst

An awardee of the Marie Curie Actions scholarship, Elizabeth built up her data crunching and analytical skills in theoretical motor neuroscience where she investigated brain mechanisms in action initiation at the Institute of Neurology, University College London.

She transferred her skillset to financial services in 2017, where she formed part of a formidable risk team at the regulatory hosting platform, ACA Mirabella. There she held the position of Senior Risk Associate, where she concentrated on risk management for funds with model-based strategies, focusing primarily on insurance-linked security investments. As part of the same role, Elizabeth worked with a subsection of the team on consolidating and improving the surveillance framework for potential market abuse of the platform’s diverse clientele, promoting an evidence-based approach in the set-up of the framework. 

Having also previously had the opportunity to study and work at various neuro-research institutions, including Karolinska Institutet, Stockholm and Radboud UMC, Nijmegen, Elizabeth brings multi-faceted experience in breaking down complex problems to facilitate custom solutions.

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Ryan Farrugia
Surveillance Analyst

Ryan most recently held the position of Senior Risk Associate at ACA Mirabella, where he was responsible for reviewing clients’ investment processes, risk management processes, strategy complexity, and operational arrangements. He was responsible for monitoring clients’ trading activities daily, including risk/trading limits. Ryan was also involved with the creation of the Governance Risk Compliance Operations Unit within the company. 

After graduating with a Bachelors’ Degree in Commerce, a Post Graduate Certificate in Finance, and a Master’s Degree in Investment and Finance, Ryan spent over two years at APS Bank in Risk Management and Finance.

TJ

Tim Jukes
Senior Surveillance Analyst

For the last five years, Tim held the position of Senior Compliance Consultant at ACA Mirabella overseeing a wide range of complex and large firms on the hosted platform. 

Tim began his career at Price Waterhouse in 1986, where he qualified as a Chartered Accountant. Following qualification, Tim transferred to Hong Kong, where he spent 5 years specialising in the audit of multinational trading and finance entities. Tim spent 18 months on secondment at the Hong Kong Securities and Futures Commission developing an inspection regime for asset managers and advisers. 

On returning to the UK, Tim spent 3 years at IMRO, a predecessor to the FCA, specialising in asset management supervision. Tim subsequently undertook several senior in-house compliance and finance roles across a range of start-up and large asset managers specialising in open-ended funds and, subsequently, private equity. Tim then moved into compliance consulting with Cordium and more recently spent 5 years working at ACA Mirabella overseeing a wide range of hosted clients.

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Paul Springer
Senior Surveillance Analyst

Paul held the position of Senior Compliance Consultant at ACA Mirabella, where he was responsible for monitoring some of the largest clients and most complex served by Mirabella. He is a compliance professional with 25+ years of regulatory experience. 

At ACA Mirabella, as well as implementing a compliance infrastructure at each client and conducting ongoing compliance reviews, Paul’s role encompassed oversight and review of clients’ electronic communications (employing Fingerprint) and their staff members’ personal compliance interactions (utilising Compliance ELF). 

Paul spent 5 years at the FCA (then the FSA) as the Manager of a Corporate Authorisation team, followed by approximately 20 years of compliance experience in the financial services industry. He has worked in-house and held the Compliance Officer and Money Laundering Reporting Officer roles for approximately 12 years, firstly at a broking firm which he joined at start-up, and then a hedge fund manager. Paul also spent over 3 years working at a leading compliance consultancy, providing compliance support to clients (including full-scope and sub-threshold AIFMs, investment managers and advisers).  He is a qualified Chartered Accountant.

George

George Camilleri
Head of Operations

George worked at ACA Mirabella for the past six years as Head of Risk Operations and managed the Malta-based Risk Team responsible for all the Firm’s risk monitoring and regulatory reporting. 

He holds an MSc in Financial Mathematics from the University of Leeds, focusing on quantitative risk management, and a BSc in Mathematics and Physics from the University of Malta. He has also taken several short courses, including the Oxford Private Markets Certificate at the Saїd Business School.

In his free time, George volunteers for non-governmental organisations within the cultural sector in Malta, having an interest in the arts, classical music, and opera.

Contact George
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Sarah Donnelly
Head of Sales

Sarah recently left ACA Mirabella, where she held the role of Head of Sales. In this role, she was focused on the company’s growth, from targeting new business opportunities to nurturing existing client relationships.

Sarah is working towards the CIPD Foundation Certificate in People Practice.

Contact Sarah
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Joe Vittoria
CEO

Joe was most recently the CEO and Founder of the Mirabella Group. During the eight years that Joe grew the Mirabella business, it became the recognised leader in regulatory hosting in the UK. As its CEO and an experienced Compliance Officer, he was responsible for ensuring regulatory compliance of Mirabella and its appointed representative clients. During his tenure at Mirabella, the firm fully and successfully complied with its regulatory obligations, which included the FCA (UK), MFSA (Malta), and the NFA/ CFTC (USA).

Mirabella conducted a thorough surveillance process across all its clients’ activities, which included over $19bn in assets under management, across over 50 investment mandates, managed by over 200 portfolio managers and traders. The investment strategies it hosted ranged from Private Equity and Real Estate to complex credit and derivative processes, with the majority in long/short equity.

Apart from his experience at Mirabella, Joe has acted as COO to other investment management firms, which included quant, debt and credit strategies. Before starting in the alternative investment management industry in 1998, Joe worked at Salomon Brothers which he joined in 1985, after graduating from Yale with a BA in Economics.

Contact Joe