FSA fines broker £30,000 over non-compliant sales
Former broker of insolvent firm had fine reduced from £160,000 due to financial hardship and illness.
The Financial Services Authority has fined stockbroker Jay Alan Rutland £30,000 for insider trading and misleading potential clients about a product’s risk using sales scripts that had not been passed by his firm’s compliance department.
Mr Rutland was a senior broker employed at Pacific Continental Securities where the regulator found he deliberately defied compliance procedures, acted against the interests of customers and disclosed inside information in order to maximise sales by his team.
PCS went into administration in June 2007 and is now in liquidation.
The FSA previously published a final notice in January 2009 imposing a public censure on PCS for breaches of the principles for businesses in connection with advising on and arranging the sale of certain higher risk securities to customers between April 2005 and June 2007.
The FSA indicated that, had PCS not been in liquidation, it would have imposed a financial penalty of £2m.
He drafted sales scripts for salespeople to use over the phone in which the risk warnings and risk factors normally used by the company were watered down.
Although these scripts had not been approved by the company’s compliance department - and Mr Rutland was not authorised to issue non-approved scripts - he still sent them around for use, according to the regulator.
The regulator originally intended to fine Mr Rutland £160,000, but reduced it due to his financial circumstances and a debilitating illness affecting his future earning capacity.
It has also imposed on him a prohibition order taking effect today.
In one of the four scripts, Mr Rutland included non-public, price sensitive information about an upcoming agreement between Provexis and a major company. He told his sales team to include this information when trying to sell Provexis shares.