The JFSC has issued a Public Statement [PS] [26 JAN 2015]

The JFSC has issued a Public Statement [PS] [26 JAN 2015] on Former employee of Horizon Trustees (Jersey) Limited (in liquidation) (“HTJL”) namely a Mr James Nicholls (“Mr Nicholls”), born 27 February 1967.

In the PS the JFSC state that Mr Nicholls displayed levels of incompetence of the most serious kind, with customers being placed at unnecessary risk of financial loss.

Mr Nicholls was not a principal person, he joined HTJL as a Trust Manager and was in post throughout the period of the Commission’s investigation. Given Mr Nicholls was not a principal or key person, the Commission does not consider him responsible for HTJL’s corporate governance and compliance failings.

Mr Nicholls acted as a director to a number of customer structures and was a director to the General Partner of the Media Fund.

In some cases, the relevant trustee or directors’ meeting, in respect of the customer structure in question, was held after monies had been transferred for the purposes of investing in Structure X. Mr Nicholls frequently acted as Chairman of those meetings in which it was resolved to invest customer monies in Structure X. The Commission’s investigation revealed that the minutes and resolutions were executed in the following circumstances:

the decisions to invest were based purely on an instruction issued by a colleague;
little, if any, consideration had been given to the key documents associated with the investments;
no bespoke consideration had been given to the interests of the customers;
the investments were made in the knowledge the monies were not to be remitted to Structure X but would be transferred directly to the Bid Co. for the purposes of discharging the Film Co.’s creditors;
no consideration was given to the numerous and significant conflicts of interest associated with an investment in Structure X to include that the CLNs had, only a short time earlier, been acquired by the Bid Co., which he understood to be beneficially owned by HTJL’s CEO;
customer structures acquired their respective interests in the CLNs by paying 80% more (the difference between £0.55 and £1.00) than had been paid by the Bid Co;
there remained significant concerns over the previous management of the Film Co.; and
the investments were high risk, suitable for professional investors only and were made knowing those officers of HTJL directing the affairs of the Film Co. had no experience whatsoever of the film and media industry.
The minutes and resolutions authorising investments in Structure X were taken from a bank of pro-forma precedents, bore little or no resemblance to the facts and therefore presented a false record. The circumstances in which the investments were authorised by Mr Nicholls revealed a failure to discharge the function of a professional fiduciary. Mr Nicholls’s conduct lacked competence.

Against the above the JFSC state that Mr Nicholls acted with a disregard to his fiduciary obligations. He knew that customers’ assets, including those of vulnerable individuals, were used to reduce the risks to which a number of HTJL’s UHNWI customers were already exposed. Mr Nicholls’s conduct lacked competence.

As a result of the conduct of Mr Nicholls and others, HTJL’s customers face the loss of very significant sums.