Regulation  

FCA bans and fines former stockbroker CEO

FCA bans and fines former stockbroker CEO

A former chief executive of a stock broking firm has been banned from holding a position in financial services and fined £450,000 by the Financial Conduct Authority.

A final notice, published today (13 March), revealed that Sam Kenny, the former chief executive of Gracechurch Investments Ltd, a stockbroking firm that is now dissolved, “routinely mis-sold” small-capitalised stocks through pressure, misrepresentation and unsuitable advice.

Between April 2008 and November 2009, Gracechurch advised approximately 340 clients to buy about £4m of shares in small-capitalised companies, which were not listed on the main market.

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A sample review showed brokers “persistently ignored” refusals by several clients to buy stock, repeatedly made calls to particular clients to persuade them to make investments, ignored protests that some did not have funds to invest, and requests for information in relation to the stocks.

This all happened while Mr Kenny was chief executive of Gracechurch.

A sample review of documents used by Gracechurch’s brokers in promoting nine stocks showed that documents concerning four of the nine stocks contained “material misrepresentations” of the financial position of the stock, the regulator states.

Mr Kenny also withheld from the FCA a “non-compliant” sales call recording that it had requested, which “deliberately” caused Gracechurch’s lawyers to provide false dates of meetings of a particular Gracechurch committee and misled the watchdog over conflicts of interest.

In December 2012, the FCA publicly censured Gracechurch and banned former Gracechurch compliance officer Carl Davey from holding a position in the financial services industry.

The FCA would have fined Mr Davey £175,000 had it not been for the serious financial hardship the fine would have caused him. It would have fined Gracechurch £1.5m but for the fact that the firm was in insolvent liquidation and had no assets.

Mr Kenny referred the original 2012 decision to the Upper Tribunal, however the tribunal “recently struck out” the reference, after he failed to provide a witness statement, enabling the FCA to issue its final notice.

Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: “As chief executive of Gracechurch, Mr Kenny was involved in serious, repeated and at times deliberate misconduct.

“On a number of occasions this amounted to dishonesty. Mr Kenny’s behaviour impacted the customers of Gracechurch, who were pressured into buying risky stocks.

“Mr Kenny has now been held to account for Gracechurch’s mis-selling and the lack of integrity in his dealings with the Authority.

“This significant fine and ban sends a strong message to those who run financial services firms, that they will be made to answer for misconduct and that we will take particularly seriously attempts to cover up misconduct by trying to mislead us with false information.”

donia.o’loughlin@ft.com