Kyte buffeted by £250,000 fine for client money and accounting failings

Kyte Group Limited (Kyte), which provides futures and options broking and clearing services to professional clients, has been fined £250,000 for failure to organise its operations responsibly and effectively in breach of Principle 3, and for not properly protecting client assets in line with Principle 10 despite repeated warnings by its auditors. In the period 1 December 2001 to September 2003, the FSA found that the firm had not performed correctly reconciliations of client money balances and had failed to move the right amount of funds out of or into segregated client accounts. Separately, weak accounting systems and controls that permitted use of ‘suspense’ and ‘holding’ accounts without proper reconciliation resulted in misallocation of items and finally a £7.2 million misstatement of its balance sheet for the year ended 30 April 2003; this has since been corrected in a prior year adjustment to the financial statements for 2004.