FCA fines Mako for cum-ex violations
20 February 2025 UK
Image: Jirapron/stock.adobe.com
The UK Financial Conduct Authority (FCA) has fined Mako Financial Markets Partnership £1,662,700 for failing to ensure it had effective systems and controls to guard against financial crime.
According to the authority, Mako also failed to adequately apply the policies and procedures it did have in place.
Therese Chambers, joint executive director of enforcement and market oversight at FCA, says: “Mako failed to spot clear red flags and facilitated highly suspicious trading that made it vulnerable to being used to support financial crime.”
Between December 2013 and November 2015, Mako executed purported OTC equity trades on behalf of clients of the Solo Group, worth approximately £68.6 billion in Danish equities and £23.6 billion in Belgian equities.
Mako received a commission of approximately £1.45 million.
The circular trading appears to have been carried out to arrange withholding tax reclaims in Denmark and Belgium.
Several individuals have now been convicted in Denmark as part of this scheme.
Additionally, Mako failed to identify red flags in other instances related to the Solo Group business.
This involved a series of transactions which the authority says had no obvious rationale, and which resulted in the Solo Group’s controller incurring a €2 million loss, to the benefit of his business associates.
Mako also received payment from a United Arab Emirates-based third party connected to the Solo Group for outstanding debts owed by the group’s clients without performing any due diligence, which created an increased risk of money laundering.
Chambers adds: “For UK financial services to grow and compete, investors need to have trust in it. That’s why it is vital we stamp out these unacceptable practices which risk the reputation and integrity of UK markets.”
As Mako has not disputed the FCA’s findings and agreed to settle, it qualified for a 30 per cent discount on its fine under the settlement discount scheme.
This eighth enforcement case brought by the FCA concludes its investigations into cum-ex trading, which has resulted in fines of more than £30 million.
According to the authority, Mako also failed to adequately apply the policies and procedures it did have in place.
Therese Chambers, joint executive director of enforcement and market oversight at FCA, says: “Mako failed to spot clear red flags and facilitated highly suspicious trading that made it vulnerable to being used to support financial crime.”
Between December 2013 and November 2015, Mako executed purported OTC equity trades on behalf of clients of the Solo Group, worth approximately £68.6 billion in Danish equities and £23.6 billion in Belgian equities.
Mako received a commission of approximately £1.45 million.
The circular trading appears to have been carried out to arrange withholding tax reclaims in Denmark and Belgium.
Several individuals have now been convicted in Denmark as part of this scheme.
Additionally, Mako failed to identify red flags in other instances related to the Solo Group business.
This involved a series of transactions which the authority says had no obvious rationale, and which resulted in the Solo Group’s controller incurring a €2 million loss, to the benefit of his business associates.
Mako also received payment from a United Arab Emirates-based third party connected to the Solo Group for outstanding debts owed by the group’s clients without performing any due diligence, which created an increased risk of money laundering.
Chambers adds: “For UK financial services to grow and compete, investors need to have trust in it. That’s why it is vital we stamp out these unacceptable practices which risk the reputation and integrity of UK markets.”
As Mako has not disputed the FCA’s findings and agreed to settle, it qualified for a 30 per cent discount on its fine under the settlement discount scheme.
This eighth enforcement case brought by the FCA concludes its investigations into cum-ex trading, which has resulted in fines of more than £30 million.
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