Poor sales practice on penny shares costs stockbroker £49,000
Sunday 04 November 2007
Stockbroker Wills & Co has been fined £49,000 for failing to make investment risks clear to customers.
The Financial Services Authority (FSA) imposed the penalty after reviewing 17 transactions between April and December last year. These all related to the sale of penny shares – which, as the name suggests, are very low in value and a highly speculative investment. The regulator found the broker had rushed its advice to customers and failed to inform them properly that the shares they were buying were high risk.
In addition, the FSA said Wills & Co – based in London and Horsham, West Sussex – had not made it clear, at the point of sale, that the penny shares were from its own account and included a mark-up that was to its benefit.
Margaret Cole, the FSA's director of enforcement, said: "Firms have an obligation to tell 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.
"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 properly protected."
Wills & Co's fine came after a routine inspection visit by FSA staff.
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