The UK Financial Conduct Authority (FCA) has fined Julius Baer International Limited (JBI) £18,022,500 for failing to conduct its business with integrity and taking reasonable care to organize and control its affairs. The FCA has also decided to ban Gustavo Raitzin, former Regional Head for Bank Julius Baer (BJB), Thomas Seiler, former BJB Sub-Regional Head for Russia and Eastern Europe and JBI non-executive director, and Louise Whitestone, former relationship manager on JBI’s Russian and Eastern European Desk.
The FCA has concluded that JBI facilitated finder’s arrangements between BJB and an employee of several Yukos Group companies, Dimitri Merinson. Under these arrangements, BJB paid the finder’s fees to Merinson for introducing Yukos Group companies to Julius Baer. This was done on the understanding that the Yukos Group companies would place large cash sums with Julius Baer, from which Julius Baer could generate significant revenues.
In particular, uncommercial FX transactions were made in which the Yukos Group companies were charged far higher than standard rates, with the profits being shared between Merinson and Julius Baer. Merinson received commission payments totaling approximately $3m due to these arrangements. These fees were improper and, together with the uncommercial FX transactions, showed a lack of integrity in how JBI was undertaking this business.
There were obvious signs that the relationships here were corrupt, which senior individuals saw and ignored. These weaknesses create the circumstances in which financial crime of the most serious kind can flourish.Mark Steward, FCA Executive Director of Enforcement and Market Oversight
JBI agreed to settle all issues of fact and partially consented to liability (but not penalty) and therefore qualified for a 15% to 30% discount under the FCA’s executive settlement procedures. Were it not for this discount, the FCA would have imposed a fine of £24,496,700.
Louise Whitestone, Thomas Seiler, and Gustavo Raitzin have referred their Decision Notices to the Upper Tribunal, where they will each present their respective cases. The Upper Tribunal will then determine whether to dismiss the respective references or remit them to the FCA with a direction to reconsider and reach a decision in accordance with the findings of the Upper Tribunal. The Upper Tribunal proceedings commenced on 28 November 2022.