The UK Financial Conduct Authority (FCA) has decided to fine Nailesh Teraiya, former sole auditor and managing director of Indigo Global Partners Limited, £5.95m and ban him from carrying out any regulated activity.
The FCA found that Mr Teraiya was responsible for Indigo’s involvement in a virtual trading scheme, which received a €91.2 million “payback” from the Danish tax authority, SKAT. In fact, it was not a refund of tax as the claim was for shares that did not exist, no dividends had been paid and no tax had been deducted.
The FCA also found that, in addition to the £326,000 he received through Indigo, Mr Teraiya received more than £5.1 million through third parties in return for his participation in the scheme. The fine the FCA decided to impose is intended to deprive Mr Teraiya of the financial benefit he received from his participation in this scheme.
The claims to SKAT were made using hundreds of false and misleading documents produced by Indigo. These documents falsely certified that Indigo’s customers held large numbers of shares, that dividends had been paid on those shares and that tax had been withheld on those dividends on behalf of the Danish tax authorities. The FCA found that Mr Teraiya knew the documents were false and misleading and were being used to support “claims” of tax that had not actually been paid.
The FCA considers that Mr Teraiya, by participating in this bogus trading scheme and deliberately misleading the FCA, including by concealing the extent to which he personally profited from the trades, acted dishonestly and with a lack of integrity.
This is the sixth case brought by the FCA in relation to cum-ex trading, with fines for the practice now totaling almost £22.5 million.