Two London investment managers are being personally fined a total of £500,000 and one is barred from practising altogether, for misleading their customers.

The UK's Financial Conduct Authority (FCA) said on Tuesday 11 August that a tribunal has passed judgment on Timothy Roberts and Andrew Wilkins, the former chief executive and the director, respectively, of Catalyst Investment Group Limited.

The two disputed a censure from the FCA in 2013. The upper tribunal have now ruled that Roberts alone must pay a £450,000 (€634,000, $700,000) fine and said he is barred from any role in regulated financial services. The tribunal called his actions "reckless". The tribunal made a separate ruling for Wilkins.

Wilkins was originally fined £100,000 by the FCA, but this was reduced to £50,000 by the tribunal. The tribunal agreed with the FCA's decision that Wilkins had acted without "due care, skill and diligence" in the matter, but not that he acted with, as the FCA argued, a "lack of integrity". It "referred the FCA's decision to prohibit him from holding significant influence functions" back to the authority for it "to reconsider whether any kind of prohibition should be imposed" on him in light of the tribunal's findings.

In 2009 and 2010, Catalyst offered bonds issued by Luxembourg-based ARM (run by Roberts), which sold asset-backed securities to UK investors. ARM did not have a licence to issue these bonds but continued to sell them while its application to do so worked its way though the Luxembourg financial regulator.

But the tribunal said Roberts and Wilkins hid this information from their customers. If the regulator rejected the application, most of the money would not be returned. In 2012, ARM's licence application to the Luxembourg regulator was refused.

In their updates to bondholders, the duo mislead buyers. Roberts and Wilkins "allowed Catalyst to provide misleading information about ARM's licence position in a letter to IFAs in December 2009," said the FCA in a statement on 11 August, also noting they did so again in 2010.

Financial firms such as Rockingham Independent Limited advised its clients to buy the bad bonds. The result was roughly 800 of the company's small-time investors lost on an average of £50,000 each. More than £40m in investors' money faced the knock-on effects of the licence refusal.

The tribunal found Roberts's conduct "demonstrated a reckless disregard for the interests of investors", while Wilkins demonstrated a lack of "due care, skill and diligence". However, the FCA pointed out both men are free to appeal the tribunal's judgment.

NOTE: This story has been altered to reflect issues raised in a legal complaint.