View the article online at http://citywire.co.uk/wealth-manager/article/a647071
FSA fines Gracechurch boss after clients lose £2m on small-caps
by Annabelle Williams on Dec 20, 2012 at 12:38
The Financial Services Authority (FSA) has handed a £450,000 fine to the chief of Gracechurch Investments after it pressured clients in to investing in small cap stocks.
Clients made losses of at least £2 million and the FSA said the fine would have been as much as £1.5 million if Gracechurch had not already been in liquidation.
Sam Thomas Kenny was formerly chief executive of Gracechurch, and the FSA said he ‘personally pressurised’ and encouraged staff to pressure clients into investing in ‘risky’ AIM or unlisted companies.
Kenny and his staff misrepresented the small cap stocks’ performance and ignored clients protestations that they had no further cash to invest.
‘Gracechurch’s brokers used pressure sales tactics to coerce its clients to invest in risky small company stocks which were listed on AIM and PLUS or not listed at all,’ the regulator said.
‘The firm misrepresented, for instance, the financial performance of stocks both orally and in writing. Brokers ignored requests for further information and protests that clients had no funds to invest. In at least one case a broker claimed that the recommendation was based on inside information.’
Alongside the £450,000 fine Kenny has been banned from holding a job in financial services.
He has referred the matter on to the Upper Tribunal.
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