Aviva Analyst Fined, Banned for ‘Cherry-Picking’
The UK’s Financial Conduct Authority (FCA) has fined an analyst and trader £139,000 ($211,000) and banned him for five years after he admitted “cherry-picking” trades to boost performance fees.
The action against Mothahir Miah, a former investment analyst at Aviva Investors, follows a £17.6 million fine for the company in February over conflicts of interest within its trading team.
Miah “exploited weaknesses in the trading systems and controls” on Aviva Investors’ bond trading desk between January 2010 and October 2012, the FCA said, in order to allocate the day’s strongest-performing securities to funds that paid performance fees.
During the period in question, the FCA’s final notice against Miah said he had earned £372,500 from Aviva Investors’ hedge fund incentive scheme—effectively his share of the funds’ performance fees. This made up 45% of his remuneration in that period, the regulator said.
“Miah knew that cherry-picking was wrong, but was motivated by a desire to prove his trading ability to his colleagues and increase his prospects of being promoted,” the FCA said in a statement. “This is because the culture within the fixed income business was heavily focused on performance and promotions tended to be based on reported investment performance.”
When Aviva Investors became aware of the practice it paid £132 million into affected funds to compensate for lost performance.
The FCA said Miah’s penalty had been reduced due to his “early admissions” and cooperation. The regulator also said it was “minded to revoke” the order prohibiting Miah from working in regulated roles in the UK after five years as he was “open and contrite.” The FCA’s bans for individuals are typically enforced for life.