FCA's action on Cum-Ex Fraud

The Financial Conduct Authority (FCA) has imposed significant penalties on Nailesh Teraiya, the former sole controller and chief executive of Indigo Global Partners Limited (Indigo), for his involvement in a fraudulent trading scheme.

Per FCA's investigation, Nailesh orchestrated Indigo's participation in a sham scheme designed to secure a "repayment" of €91.2 million from the Danish tax authority, SKAT. However, this claimed repayment was based on non-existent shares, with no actual dividends issued or taxes withheld.

Furthermore, Nailesh received over ￡5.1 million from third parties as a result of his role in the scheme, in addition to ￡326,000 received directly through Indigo. The FCA's fine aims to strip him of the financial gains obtained through this fraudulent activity. FCA has imposed a fine of ￡5.95 million and prohibited him from undertaking any regulated activities.

The scheme relied on the submission of hundreds of false and misleading documents by Indigo, falsely asserting ownership of shares, dividend payments, and tax withholdings. The FCA determined that Nailesh was fully aware of the fraudulent nature of these documents and their use in making deceptive tax reclaims.

The FCA condemned Nailesh's actions as dishonest and lacking integrity, highlighting his deliberate efforts to deceive the FCA and conceal his personal profits from the scheme.

Therese Chambers, joint Executive Director of Enforcement and Market Oversight at the FCA, stressed that such behaviour has no place in UK markets and undermines the integrity of the financial system.

This enforcement action is part of the FCA's broader campaign against fraudulent trading practices, especially in the realm of cum-ex trading. With fines totalling nearly ￡22.5 million across six cases related to cum-ex trading, the FCA reaffirms its dedication to upholding market integrity and collaborating with international law enforcement agencies to combat financial misconduct.