Financial Supervisory Authority imposes penalty payment of EUR 100,000 on Navi Group Ltd
The Financial Supervisory Authority (FIN-FSA) has imposed a penalty payment in the amount of EUR 100,000 on Navi Group Ltd. The company violated several legal provisions during the period 31 December 2011 – 22 November 2013.
In its asset management business, Navi Group Ltd has failed to comply with the provision of the Investment Services Act on the safekeeping and segregation of customer assets and received repayable funds from the public, in breach of the Credit Institutions Act. In addition, the company has neglected to perform actions related to the identification and prevention of conflicts of interest and to ensure sound corporate governance.
The Investment Services Act provides that, in the safekeeping and handling of customer assets, investment firms must ensure in particular that customer assets are kept clearly segregated from the investment firm’s own assets. This is a key provision on customer protection related to the investment services business, aimed at preventing customer assets from mingling with an investment firm’s own assets and hence at protecting customers in the event of a default by an investment firm.
Pursuant to the Credit Institutions Act, reception of repayable funds from the public is, as a rule, permitted only for deposit banks and other credit institutions.
According to the Investment Services Act, investment firms must arrange their activities in a reliable manner and ensure the effectiveness of risk management and internal control. Investment firms must also identify conflicts of interest related to their business and seek to prevent the emergence thereof.
In the present case, FIN-FSA is under a statutory obligation to impose a penalty payment or, on certain conditions, to issue a public warning instead. A penalty payment may be at most 10% of the turnover of the year preceding the legal person’s act or neglect; however, it may not be in excess of EUR 10 million. The maximum amount of a penalty payment determined on the basis of Navi Group Ltd’s turnover would have been slightly more than EUR 228,000. The penalty payment is ordered payable to the State.
The decision of FIN-FSA is not yet legally binding. The company has the right to appeal the decision of 4 November 2014 to the Market Court within 30 days of the company’s receipt of notice of said decision.
For further information please contact
- Sonja Lohse, Chief Adviser, tel. +358 10 831 5311
Appendix
- Decision by the Financial Supervisory Authority (in Finnish, pdf)