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FSA fines stock broking firm £101,500

Published on 18 Feb 2010 under category: legal

A Glasgow stock broking firm has been fined £101,500 after its appointed representative used misleading sales pitches.

The Financial Services Authority (FSA) said that Direct Sharedeal Limited's(DSL) representative First Colonial Investments LLP (FCI) failed to set out the "inherent risks" of buying penny shares to customers.

DSL would have been fined £145,000 if it had not agreed to settle in the early stages of the FSA investigation, as well as providing redress to affected clients.

The investigation by the industry body found that customers' money was at risk from being placed into an unregulated firm by FCI and that they were misleading customers on several counts.

FCI did not provide information on risk and instead mislead clients about the viability of the companies they were being advised to invest in.

Margaret Cole, the director of enforcement at the FSA, said: "The small cap stock broking sector has been under increased vigilance by the FSA because of a need to drive up standards of customer treatment in this sector.

"This fine should serve as a warning to firms with similar business models that they need to be vigilant about what is going on at their appointed representatives - the responsibility lies with the authorised firm."

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