Mutual society NED banned (but will appeal) for failures to disclose conflict of interest

The FCA is attempting to ban Angela Burns (and fine her £154,800) from any regulated activity for failing to disclose a conflict of interest whilst acting as a NED at two mutual societies. Ms Burns is appealing to the Upper Tribunal. FCA press release here; Decision Notice here (also discussing breach of section 177 Companies Act 2006). Herbert Smith note here.

From the FCA press release:

“In 2006 Ms Burns completed a consultancy project for a US based investment manager.  Shortly after she completed this project Ms Burns asked the investment manager for the opportunity to turn her proposal into a UK business.  The investment manager did not take her up on her proposal but she stayed in touch with them.

In September 2008, Ms Burns put forward a proposal outlining the consultancy work she could perform for the investment manager.

In January 2009 and May 2010, Ms Burns became a NED and chair of the investment committee for two UK mutual societies.  Upon taking up her NED positions Ms Burns notified the investment manager of her new roles and renewed her request for consultancy work.

Ms Burns did not tell the mutual societies that she was at the same time trying to obtain work from the investment manager and, in the FCA’s opinion, attempted to use her NED positions to benefit herself when she emailed the investment manager on:

  1. 24 February 2009, notifying it of the potential business opportunity at one of the mutual societies and in the same email reminded the investment manager of her interest in obtaining consultancy work and a NED position from the investment manager;
  2. 26 February 2009, reminding it of the potential business opportunity at one of the mutual societies and in the same email asked the investment manager to consider her for a role as a NED; and
  3. 5 November 2010, reminding the investment manager of her 2008 proposal.

During Ms Burns’ tenure as NED and chair of the investment committees at both mutual societies, one mutual society placed a £350 million mandate, and the other was considering placing a £750 million mandate with the investment manager.

In the FCA’s opinion, Ms Burns had a duty to disclose her interest in seeking consultancy work from the investment manager to her fellow mutual societies’ directors. Ms Burns made no such disclosure.  In the FCA’s view, Ms Burns also attempted to use her NED positions to benefit herself.

In the FCA’s opinion, given the serious nature of these breaches, these failures demonstrate that Ms Burns lacked integrity.”

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