The FCA has provisionally fined Nailesh Teraiya, formerly sole controller and chief executive of Indigo Global Partners Limited (Indigo), £5.95m and has provisionally banned him from carrying out any regulated activity after finding him guilty of making fake trades.

Mr Teraiya has referred the decision notice to the Upper Tribunal, so the FCA’s findings are provisional.

The FCA found that Mr Teraiya was responsible for Indigo’s participation in a sham share trading scheme which obtained “repayment” of €91.2m (£78.05m) from the Danish tax authority, SKAT.

In reality, it was not a repayment of tax as the claim related to shares that did not exist, no dividends had been paid and no tax had been deducted.  

The FCA also found that, in addition to £326,000 received through Indigo, Mr Teraiya received more than £5.1m through third parties in return for his part in the scheme. The fine that the FCA has decided to impose seeks to deprive Mr Teraiya of the financial benefit he has received from his involvement in the scheme.

The claims to SKAT were made using hundreds of false and misleading documents produced by Indigo, the FCA said. The documents falsely certified that clients of Indigo owned large numbers of shares, that dividends had been paid on these shares and that tax had been withheld on these dividends on behalf of the Danish tax authorities.

The FCA has found that Mr Teraiya knew that the documents were false and misleading and that they were used to support “reclaims” of tax which had never actually been paid. 

The FCA said it considered that by participating in the sham trading scheme and deliberately misleading the FCA, including concealing the extent he had personally profited from the trading, Mr Teraiya acted dishonestly and with a lack of integrity. 

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: "As chief executive of Indigo and an experienced industry professional, Mr Teraiya knew that these were fake trades, supported by fake documents. He acted dishonestly and personally benefitted to the tune of more than £5m for his part in this scheme. There is no place for such conduct in UK markets. 

"It is a clear example of the action we take against individuals who abuse their position for personal gain and damage the integrity of the UK’s financial system."

Indigo Global Partners Limited was formerly known as Indigo Securities Limited, and is in creditors' voluntary liquidation. Liquidators were appointed on 20 October 2021. According to Companies House records, the company was set up in July 2008 and operated until February 2017. Mr Teraiya's address was listed as being in Dubai, according to the records.

According to his LinkedIn page, Mr Teraiya went to Watford Grammar School For Boys before gaining a degree at Middlesex University.

It is the sixth case brought by the FCA in relation to cum-ex trading, with fines for the practice now totalling nearly £22.5m. This work has been facilitated by the engagement between the FCA and global law enforcement authorities, the FCA said.