The Financial Conduct Authority, the UK regulator,
has punished two senior executives at UK-based Catalyst Investment Group after
their firm “recklessly misled” clients over bond sales.

The case has been referred to the FCA’s Upper Tribunal,
which may uphold, vary or cancel the decision, the FCA said in a statement on
Friday.

The watchdog fined former CEO Timothy Roberts £450,000 ($722, 645) and
banned him from the financial services industry; it fined former director
Andrew Wilkins £100,000 and prevented him from holding senior roles in future.

“The decision notices reflect the FCA’s view of events and
of Roberts and Wilkins’ behaviour,” the watchdog said.

Catalyst has also been censured by the FCA for recklessly
misleading investors when promoting bonds offered by ARM Asset Backed
Securities SA (ARM) between November 2009 and May 2010.

Roberts was CEO of Catalyst and a director of ARM from March
2007. The FCA found Roberts had recklessly approved unfair and misleading
communications to investors. Wilkins was a director at Catalyst between October
2007 and March 2010. The FCA found he allowed Catalyst to continue promoting
ARM bonds and approved misleading communications to investors, the statement
said.

“The FCA found that both men failed to act with due skill,
care and diligence, and Roberts’ conduct demonstrated a lack of integrity.
Furthermore they both failed to inform Catalyst’s compliance officer of the
fact that ARM believed it needed a licence to issue the bonds until December
2009,” it said.

UK
investors have invested £54 million in ARM bonds, including £17.1 million in
un-issued ARM bonds, and may lose a significant part of their investment.