The City regulator has fined and banned David Gillespie and David Welsby of Pritchard Stockbrokers Limited for failings which lost clients a total of £3m.
According to a final notice from the FCA, client money was wrongly used to pay business expenses, and that Mr Welsby and Mr Gillespie “routinely failed” to pay sufficient funds into Pritchard’s client bank account to cover shortfalls in client money.
Mr Gillespie, managing director of the stockbroking and wealth management firm, was fined £10,500, while finance director Mr Welsby was fined £14,000, both for recklessly failing to protect client money and committing a number of specific breaches of the FCA’s client money rules.
The FCA notice also said the firm had placed reliance upon the offshore facility as a client money resource despite the fact that such a facility was not permitted to be included, and the FCA was not informed when a shortfall in client money occurred. This behaviour contributed to a loss of approximately £3m of client money by the time Pritchard entered into special administration on 9 March 2012.
The FCA said that had it not been for its financial position, Pritchard would have been fined £4,932,600.
Tracey McDermott, director of the enforcement and financial crime division of the FCA, said: “Ensuring that client money is properly protected is a basic, but fundamental, regulatory requirement. Their conduct fell far short of our standards. Their recklessness contributed to a shortfall of £3m of client money and resulted in significant consumer detriment.”
