By Marcus Leach
The Financial Services Authority (FSA) has today fined Ravi Shankar Sinha £2.867 million for fraudulently obtaining £1.367 million for himself from a company owned by a private equity fund advised by JC Flowers by means of a fictitious invoicing scheme.
The financial penalty consists of £1.367 million disgorgement and a punitive element of £1.5 million. Sinha is also prohibited from performing any function in relation to any regulated activity in the financial services industry.
Between 16 May 2005 and 11 November 2009, Sinha was the chief executive officer of JC Flowers & Co UK Limited (JCFUK). As such he acted as an investment advisor to certain private equity funds (JCF Funds) through a US based private equity firm.
The financial crisis led to a very significant deterioration in Sinha’s financial position from 2007 onwards. He borrowed heavily to finance investments whose performance declined and left him unable to service his debts.
In response to his deteriorating financial position, between 17 February and 26 October 2009 Sinha issued invoices to a company, in which the JCF Funds had invested, for fees payable to himself, to which he knew he was not entitled.
In order to secure payment of the invoices, Sinha deliberately misled the company’s CEO by claiming that the payments had been authorised and approved by JCFUK, when in fact no such authorisation or approval had been sought or given. In addition, Sinha dishonestly concealed from JCFUK the fact that he had received the payments from the company.
“Sinha exploited his position of trust as CEO to fraudulently obtain significant sums for his personal benefit. He engaged in a dishonest, deliberate and sustained course of misconduct which lasted for several months. Such behaviour has no place in the financial services industry," Tracey McDermott, acting director of enforcement and financial crime, said.
“Sinha becomes the latest in a long line of dishonest individuals who have found themselves facing substantial fines and being banned from working in financial services. Those who take on the responsibility of being an approved person should be in no doubt about our commitment to take the strongest action to tackle such behaviour - wherever we find it.”
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