The Financial Conduct Authority has had its decision to ban and fine former hedge fund boss Alberto Micalizzi upheld by a tribunal.
The Upper Tribunal agreed with the FCA's verdict that Micalizzi should be heavily penalised for his role in attempting to hide losses of approximately £230m ($390m, €292m) from investors.
Micalizzi was employed as CEO of Dynamic Decisions Capital Management (DDCM), which managed the DD Growth Premium Fund - described as a "low risk, highly liquid, market neutral strategy."
However, the fund suffered huge losses in Q4 of 2008, with approximately 85% of it evapourating.
The FCA stated: "Micalizzi sought to conceal these losses from investors by deliberately misrepresenting the fund's value and subsequently entering into agreements with third parties to acquire units with a face value of $700m in purported convertible bonds issued by a Nevada based company backed by Russian diesel oil."
Micalizzi had appealed to the Upper Tribunal to have the fine severely reduced over fears that it would force him to declare bankruptcy.
The tribunal did tell the FCA's predecessor, the Financial Services Authority, to reduce its fine from £3m to £2.7m at the time the case first surfaced, but stated that if the disingenuous money manager were to declare bankruptcy as a result of the penalty, it would be a fitting punishment.
"Such misconduct merits a substantial penalty both to reflect the seriousness of the case, and as a deterrent to others. We have concluded that a penalty of £2.7 million is appropriate in this case," said the court.
In conclusion, the tribunal said: "The power to prohibit an individual from performing any function is a critical function in relation to the protection of consumers."