The Financial Conduct Authority (FCA) has banned Demetrios Hadjigeorgiou from holding senior management positions in financial services and imposed a financial penalty of £56,400 over his conduct at former discretionary fund manager SVS Securities Plc.
Hadjigeorgiou was finance director of SVS before becoming chief executive officer, a role he held until shortly before the firm entered special administration. The FCA found that he failed to properly manage SVS and to protect customers' interests.
Findings against Hadjigeorgiou and SVS
According to the FCA, SVS invested customer money, including pension savings, in high-risk products while receiving significant payments from the companies that issued those products. The regulator concluded that Hadjigeorgiou failed to exercise due skill, care and diligence in managing the firm.
The FCA also highlighted a decision at SVS to reduce the value of customers' bond investments by 10% when they sought to sell them. Hadjigeorgiou failed to challenge this decision, which generated £359,800 for SVS. Customers were not clearly informed about the reduction, and some consequently lost part of their pension savings.
SVS customers were significantly exposed to bond investments. The FCA stated that 879 customers had invested a combined £69.1 million in bonds through the firm. These bonds later defaulted, leaving customers unlikely to recover more than a fraction of their investments.
Regulatory process and sanctions
The FCA’s latest action follows an earlier Decision Notice proposing an £84,600 penalty and a prohibition order against Hadjigeorgiou. He referred the decision to the Upper Tribunal but later settled with the FCA and withdrew his referral. As part of the settlement, the final financial penalty was reduced to £56,400, while the prohibition from senior management roles in financial services was confirmed.
SVS entered special administration and was subsequently dissolved. The case has led to further regulatory action in the UK and abroad relating to the treatment of customer pension funds.
Action against other former SVS executives
The FCA also took action against former SVS CEO and majority shareholder Kulvir Virk and former head of compliance David Stephen. Virk was fined £215,500 and permanently banned from UK financial services in connection with the handling of customer pension funds.
Separately, the Dubai Financial Services Authority banned Virk from performing any function connected with financial services in or from the Dubai International Financial Centre.
Commenting on the case, Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: "Building up a pension for retirement is one of the most important investments you can make. Where senior leaders fail to put customer interests first, we will act."
