By Intense Life Desires 
The FCA has said it will not persue a financial penalty against a fake trader following a request from the Danish tax authority.
The FCA has decided to no longer seek a £5.95m financial penalty against Nailesh Teraiya, formerly sole controller and chief executive of Indigo Global Partners Limited (Indigo).
The regulator’s ban on him from carrying out any regulated activity, after finding him guilty of making fake trades, continues in place.
The regulator had imposed a provisional fine of £5.95m on Mr Teraiya but has decided to no longer seek a financial penalty following a request from the Danish tax authority SKAT.
The Danish told the FCA that if it were to pursue a financial penalty, it could prejudice SKAT’s civil proceedings against Mr Teraiya and other efforts to recover losses.
The FCA said in a statement: “it is no longer in the public interest” for it to pursue a penalty against Mr Teraiya.
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 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.