View the article online at http://citywire.co.uk/money/article/a647079
FSA fines and bans stock broker boss
The chief executive of Gracechurch Investments has been fined £450,000 and banned along with the firm's compliance officer.
The City regulator has fined the boss of a shares 'boiler room' £450,000 after censuring his firm Gracechurch Investments for pressuring investors into buying risky shares that lost them £2 million.
The Financial Services Authority (FSA) has fined Sam Thomas Kenny, who was chief executive of Gracechurch and banned him from holding a position in the financial services industry.
Kenny has referred the FSA decision to fine and ban him to the Upper Tribunal where the FSA will present its case that Kenny personally pressured or misrepresented material facts to clients and trained and encourage staff to pressure consumers.
Gracechurch compliance officer Carl Peter Davey has also been banned form working in financial services for deliberately with-holding details of non-compliant sales calls from the FSA. He would have been handed a fine of £175,000 but escaped it due to the ‘serious financial hardship’ it would cause him.
Gracechurch has also been censured by the regulator for high pressure-selling tactics that pushed customers to invest in the shares of small companies that were listed on the AIM and Plus exchanges or were not even listed at all.
The staff at Gracechurch were found to have misrepresented the financial performance of stocks both over the phone and in writing to investors. Its brokers also ignored requests for further information from investors and protests from victims that they did not have the money to invest.
On one occasion one broker said an investment should be made based on inside information.
The FSA said it would have fined Gracechurch £1.5 million but could not as the company was in liquidation.
Tracey McDermott, director of enforcement and financial crime at the FSA, said: ‘High pressure sales tactic and systematic misrepresentation to clients are wholly unacceptable practices. The FSA will not tolerate firms coercing clients into buying financial products or services that aren’t suitable for them.'
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by Himanshu Singh on Oct 31, 2014 at 03:03