Hoodless Brennan, the cut-price stockbroker, was fined by the Financial Services Authority for the second time in less than three years yesterday, after its brokers were found to have used over-aggressive sales techniques.
The FSA fined the broker £90,000 after uncovering a string of unsuitable sales practices within the firm, which were "both below regulatory standards and Hoodless's own internal standards", it said.
The fine related to the sale of stock in Knowledge Technology Solutions (KTS), an AIM-listed software company whose clients included Hoodless. The FSA said Hoodless's brokers tried to sell the stock to clients who "were not ready" to buy it, and tried to persuade customers to buy more stock than they wanted. The salesmen used news of Hoodless's contract with KTS, which was not in the public domain at the time, as a hook for the sale.
In one case, a broker bought a client twice as much stock as he had asked for, and said he was unable to reverse the transaction.
Margaret Cole, the FSA's director of enforcement, said: "The fair treatment of customers must be part of corporate culture so that a firm treats its customers fairly on all occasions of its dealings.
"Brokers at Hoodless Brennan used unacceptable selling practices and did not pay enough attention to the interests or the information needs of their customers. Nor did they take time to communicate with their customers in a way which was clear, fair and not misleading. The FSA will not tolerate this method of selling shares to private customers."
In a statement yesterday, Hoodless said the period during which the transactions took place - summer 2003 - was a time of "significant transition" for the company. It added that no customers were advised in a manner outside their investment risk criteria, and said all 13 customers who were affected had continued to trade with Hoodless after the event. The company also said significant improvements had been made to its systems and controls to prevent any recurrence.
The penalty comes less than three years after Hoodless was fined £150,000 for making a misleading statement to the market regarding a share placing by the media company PrimeEnt. Hoodless's chief executive at the time, Sean Blackwell, was refused FSA approval to become an investment manager. The authority also attempted to refuse an application for authorisation from the company's co-founder, Geoffrey Hoodless. However, Mr Hoodless successfully overturned the decision in the Financial Services & Markets Tribunal.Reuse content