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Stockbroker fined £49,000 over mis-selling penny shares |
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A West Sussex stockbroker who sold penny shares without fully explaining the risks has been hit with a £49,000 fine by the Financial Services Authority.
The FSA accused Wills & Co of Horsham of failing to treat its customers fairly by leaving them unable to make ‘proper and informed’ investment decisions. The action follows a review of some 17 transactions carried out by Wills & Co between April and December 2006.
The advice the company gave to clients was ‘unclear, unfair and misleading’, the FSA said. In every case the advice had been given in a ‘rushed manner without clear and/or prominent warnings about the higher risks involved.’
The FSA has clamped down heavily on the sale of penny shares in recent years, and has again warned firms that ‘consumers need to be aware that penny shares carry additional and higher risks’. Penny shares typically have low prices and a limited trading history, and investors are attracted by the prospect of making big returns over a short period. However, many penny shares also sink without trace.
Margaret Cole, director of enforcement at the FSA, warned other brokers to take heed. She said: ‘Firms have an obligation to tell their customers about the risks they face when buying any financial product. Wills & Co failed to do this so its customers were unable to make proper and informed investment decisions, which is an essential element in treating customers fairly.
‘This fine should serve as a warning to other small firms who might be using these practices that they are not under our radar and the FSA will do all it can to ensure consumers are given suitable information and properly protected.’treating customers fairly.
Source: Tony Bonsignore, Citywire |
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