The Jersey Financial Services Commission (JFSC) has banned an independent financial adviser from the industry for "lacking integrity".
In a statement on 20 May, it prohibited Gufur Hussain from working in the island's finance industry following an investigation into his conduct after he arranged loans of more than £1m from people who were his financial advice clients.
The investigation, which has not revealed the name of the company he worked for in the regulator's public statement, concluded that he repeatedly failed to disclose conflicts of interest to the company he worked for as a financial adviser and knowingly provided the JFSC with false and/or misleading information.
It is vitally important to be open and frank with your employer and the JFSC. The smart thing for financial advisers to do is make sure they keep their own financing entirely separate from the investment choices of those they advise.”
The investigation also concluded that Hussain continued to have contact with clients when the regulator had imposed directions on him not to do so.
JFSC Director General, Martin Moloney said: "Mr Hussain failed in his obligations to disclose conflicts of interest. Becoming a beneficiary of a client's investment decisions while being their adviser is the underlying source of the conflicts of interest in this kind of case.
Being someone's financial adviser is a huge responsibility. It is vitally important to be open and frank with your employer and the JFSC. The smart thing for financial advisers to do is make sure they keep their own financing entirely separate from the investment choices of those they advise."
Setting out the background to the case in a public statement on 20 May, the JFSC said on 2010, Hussain relocated to Jersey from the United Kingdom (UK), commencing employment at a registered person, namely Company X, as a relationship manager.
In November 2015, Hussain commenced employment as an investment employee and independent financial adviser of another registered person, namely Company Y, which is registered by the JFSC to carry on investment business. Hussain held this role until his resignation on 24 June 2019.
In April 2016, the JFSC launched an investigation with respect to Hussain and potential unauthorised financial service business having been carried out, concluding the conduct of Hussain did not constitute unauthorised financial service business.
However, Hussain was considered to have acted with a lack of candour in that he failed to act in a sufficiently transparent and co-operative manner with the JFSC. In this respect, Mr Hussain was warned, both orally and in writing, of his conduct and informed that the JFSC's concerns would remain on his regulatory record.
On 29 November 2018, Hussain incorporated a UK company, HFZ Property Developments Limited (HFZ Limited), for the purpose of developing building projects.
Hussain is the sole beneficial owner, director and shareholder of HFZ Limited. Prior to the incorporation of HFZ Limited, Mr Hussain was already involved in property development in the UK, whereby he would purchase properties in his own name for redevelopment.
In May 2019, the JFSC came into possession of information which gave cause for concern over the fitness and propriety of Hussain in his conduct as an IFA of Company Y. Consequently, the JFSC commenced an investigation into Mr Hussain's fitness and propriety which focused on his integrity, competence and financial standing.
The JFSC concluded that Hussain, in dealing with the JFSC and Company Y, has done so with a persistent lack of transparency, and that his individual actions demonstrate of a lack of integrity and formed part of a series of actions lacking integrity.
Hussain secured funding for a personal purpose that he knew was in contravention of Company Y's policies. Hussain deliberately concealed his actions from both Company Y and the JFSC, and in doing so, wrongly circumvented restrictions the JFSC had put in place to safeguard the four clients.
Hussain's conduct therefore demonstrated a lack of integrity, shown by his conduct towards Company Y, his conduct towards the JFSC and his conduct towards the four clients.