Mr Iskander Karam7th February 2024
The Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 (“the Enforcement Powers Law”)
The Protection of Investors (Bailiwick of Guernsey) Law, 2020 (“the 2020 POI Law”)
The Protection of Investors (Bailiwick of Guernsey) Law, 1987 (“the 1987 POI Law”)
The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2020 (“the Fiduciaries Law”)
Mr Iskandar Karam (“Mr Karam”)
Also known as:
Mr Alexander Karam; and
Mr Alexander Kaymen
On 23 January 2024 the Guernsey Financial Services Commission (“the Commission”) decided:
- To impose a financial penalty of £10,000 on Mr Karam under section 39 of the Enforcement Powers Law;
- To make an order under section 33 of the Enforcement Powers Law prohibiting Mr Karam from any function for a period of two years;
- To issue a Notice under section 32 of the Enforcement Powers Law disapplying the exemption set out in section 3(1)(g) of the Fiduciaries Law in respect of Mr Karam for a period of two years; and
- To make this public statement under section 38 of the Enforcement Powers Law.
Mr Karam was the controller of an investment manager licensed under the 1987 POI Law and was a director of a collective investment scheme authorised under the 1987 POI Law. As such, Mr Karam was required to complete a Personal Questionnaire form. Mr Karam submitted his Personal Questionnaire on 20 February 2018 in connection with the application for licensing of the investment manager and for the authorisation of the collective investment scheme.
Pursuant to section 38(2) of the 1987 POI Law, a person who in connection with an application for a licence, or in connection with an application for a licence, or in connection for an authorisation, or registration of a collective investment scheme, furnishes information, or recklessly makes a statement which he knows is false or misleading in a material particular, or recklessly furnishes information, or makes a statement which is false or misleading in a material particular is guilty of an offence.
The Commission’s investigation (“the Investigation”) commenced in June 2020 following the investment manager and collective investment scheme being placed into Administration Management.
The Investigation found that Mr Karam had deliberately or recklessly made a number of false and/or misleading statements in his Personal Questionnaire submitted in connection with an application for a licence and for the authorisation of a collective investment scheme. As a result, the Commission found that Mr Karam had materially contravened the requirements of the 1987 POI Law and did not meet the fit and proper requirements set out in the Minimum Criteria for Licensing contained in Schedule 4 to the 2020 POI Law.
Mr Karam’s Employment History
Mr Karam stated on his Personal Questionnaire that he had been employed as a “Board Member” of Company A since March 2002. However, the Commission’s research showed that Company A was only incorporated in March 2012, some ten years after Mr Karam stated that he commenced employment with Company A. The Commission’s research also showed that Mr Karam was not appointed as a director of Company A until March 2019, some seventeen years after the date shown on his Personal Questionnaire.
At the time of the incorporation of Company A, Mr Karam’s wife was the sole director and Mr Karam was named as the contact for any queries on the application for incorporation. Therefore, Mr Karam must have known that the date given on his Personal Questionnaire for his employment as a “Board Member” of Company A was false or misleading. Further, it was conceded in oral representations that there was never a Board of Directors for Company A or any related company and that the term ‘Board’ was used a shorthand to describe advisors to the business over the period of its operation.
Mr Karam subsequently explained in oral representations that Company A was branded as Company B, which acted as a sole trader, prior to 2008 when Company B was formed. Records for Company B show that Mr Karam was never a director of Company B. Mr Karam also subsequently explained in oral representations that the business had existed in various forms over the period and eventually became Company A.
Records for other companies related to Company B show that Mr Karam changed his name from Alexander Karam to Alexander Kaymen in 2005. Whilst Mr Karam noted on his Personal Questionnaire that he was known as Alexander Karam, he failed to note that he was also known as Alexander Kaymen.
Mr Karam’s Job Description
Mr Karam stated on his Personal Questionnaire that his role of “Board Member” of Company A included responsibility for personnel, remuneration, communication between global offices and financial modelling. However, internet research did not find any substantial details for Company A.
The accounts for Company A for the year ending 30 March 2018 did not demonstrate that Company A was a large company that would require Mr Karam to be responsible for such issues as personnel, remuneration, communication between global offices or financial modelling. Indeed, the accounts showed that the average number of employees during the year to 30 March 2018 and the year to 30 March 2017 was one.
Mr Karam’s description of his role as a “Board Member” of Company A from 2002 to 2018 was false and was misleading.
Mr Karam’s Other Relevant Experience
In relation to other relevant experience, Mr Karam stated on his Personal Questionnaire that he was a member of the Advisory Committee for a Chamber of Commerce, endorsed by the UK Government.
The Commission’s research showed that the Chamber of Commerce noted on Mr Karam’s Personal Questionnaire was, in fact, a company owned by Mr Karam’s wife. Mr Karam’s wife was also the only director of the Chamber of Commerce.
In an email between advisers and copied to Mr Karam six months after the submission of his Personal Questionnaire, the Chamber of Commerce was described as being inactive since incorporation, that there were no patrons, chairman or advisory board and no income was received through membership fees or from any other sources since incorporation. Mr Karam did not correct his advisers in writing.
It was conceded that the Chamber of Commerce did not itself receive official endorsement from the UK Government, Mr Karam relied upon a memorandum of understanding between an organisation of which the Chamber of Commerce was itself a member, and the UK Government.
Mr Karam conceded that there was no Advisory Committee and that the expression was used as shorthand in relation to his advisory role to the Chamber of Commerce.
This was a further false and/or misleading statement by Mr Karam.
The Commission relies on licensees and prescribed persons to conduct themselves in a manner that is open and honest. The Commission does not have the resources to verify all of the information that is provided to it and nor should it have to. Therefore, the provision of false and/or misleading information to the Commission is treated as an extremely serious matter.
The Personal Questionnaire is one of the primary tools for the Commission to gather information to assess whether a person is fit and proper to hold a prescribed position in relation to an application for a licence. The provision of false and/or misleading information in a Personal Questionnaire undermines the application process.