In the UK today, the Financial Services Authority announced that it has brought an action against City Gate Money Managers Limited and the firm's director and compliance officer, Stewart Domke. 

The FSA claims that City Gate advised on pension transfer and income drawdown business when it did not have permission to do so; produced a financial promotion that did not comply with FSA rules and could have misled potential investors; and failed to have adequate systems and controls in place to monitor and oversee its advisers and appointed representatives. On the issue of systems and controls, the FSA noted that it similarly fined City Gate £42,000 in July 2009 for "systems and controls failings around the approval of financial promotions and inadequate monitoring of appointed representatives."

The FSA issued a public censure of City Gate and banned Domke from holding any "Significant Influence Functions." The department said it would have imposed financial penalties of £180,000 on City Gate and £70,000 on Domke but elected not to because the firm is in liquidation and Domke demonstrated that a fine would cause him "serious financial hardship."

With respect to Domke, the FSA found that he was deficient in overseeing City Gate's compliance effort. The FSA alleged that Domke failed to address the failures identified by the FSA's 2009 action against City Gate; delegated important compliance functions to others but failed to oversee their work, resulting in serious compliance failures at City Gate; and allowed City Gate to operate without having adequate systems and controls in place.

The FSA's Bill Sillett described City Gate as a rare "repeat offender" for its failure to improve its systems and controls after the first enforcement action. Sillett was also critical of Domke, stating that as compliance officer he was in a position to improve compliance at City Gate but failed to do so, "leaving in place inadequate systems and controls and failing to monitor or check City Gate's appointed representatives."

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