Stockbroker fined by financial regulator

 

January 24, 2008

A stockbroker in the UK has been fined by the Financial Services Authority after being found guilty of selling risk shares to elderly and inexperienced investors. The fine that the FSA was going to impose on the stockbroker was £1.5 million, but an offer of early settlement and the poor state of finances has seen this fine reduced to £250,000. The FSA has stated that the case is one of the worse that it has come across, and the broker was using hard sell and pressurised tactics to get vulnerable investors to purchase the risk shares.

According to officials from the FSA one elderly customer agreed to a £25,000 risk limit with an investment, but his account had unauthorised transactions of £75,000 showing. The company also called another consumer, and in a bid to get them to invest stated ‘our 20 analysts are excited about the said deal’ However, officials state that the company, Square Mile Securities, actually has no analysts working for it.

The firm has stated that all traders involved in these sales have now left the firm, and that the company is cooperating fully with the investigation. The investigation was launched because of the firm’s links with a number of higher risk companies. It was found that over £4 million worth of shares had been sold to customers in the space of a few months in 2006, and then share prices had quickly fallen.

An official from the FSA stated: ‘We will not tolerate any regulated firm coercing customers into buying financial products or services they do not want or cannot afford.’

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