The former chief executive of a now dissolved execution-only broker the regulator judged to have mis-sold small-cap stocks has been fined £450,000 and banned by the FCA.
Sam Thomas Kenny, former chief executive of Gracechurch Investments Limited, which went into liquidation on 13 July 2010, was found to have been personally responsible for numerous significant failings at the firm.
In a 33-page final notice to Mr Kenny, dated 13 March 2015, the FCA argued that the firm had routinely mis-sold small-cap stocks through pressure, misrepresentation and knowingly misleading and unsuitable advice.
The City watchdog considered that Mr Kenny had been responsible for misrepresenting material facts when advising clients to buy small-cap stocks, intentionally training and encouraging staff to impose pressure on clients and knowingly or recklessly providing conflicted advice to clients and then lying to the authority about that advice.
According to the FCA, Gracechurch Investments had an average of 15 to 20 individuals operating as brokers at any one time, and the firm advised about 340 clients to buy approximately £4m of small-cap stock from 1 April 2008 to 4 November 2009.
The FCA said: “Gracechurch’s clients would have lost 72 per cent of the amount they invested (a loss of £1.901m out of £2.624m) had they held until 12 October 2011 (the firm’s recommended holding period being generally two to five years) eight of the top 10 stocks by financial volume that the firm advised them to buy in the relevant period.”