Watchdog punishes financial adviser for misleading investors

Click to follow
The Independent Online

A financial consultant has been struck off the professional register after he seriously misled investors about flotations he was handling for two companies in 1998 and 2000.

John Hallworth must also pay legal costs of £15,000 following an investigation by the Securities and Futures Authority. His Birmingham-based firm, Griffiths and Lamb, has been barred from operating and must pay legal costs of £5,000 after it failed to curtail its employee's actions.

Mr Hallworth organised share subscriptions for a music business in 1998 and a medical research outfit in 2000 which both failed to attract the minimum level of interest from investors necessary for the flotation.

Yet in both cases Mr Hallworth failed to inform those who did express an interest. In the first case, he also failed to check the financial strength of the institution underwriting the offer, which subsequently said it was unable to meet its commitment to make up the shortfall.

In the second instance of the medical research company, Mr Hallworth said that there had been sufficient applications to meet the minimum subscription level of £1m, when only 30 per cent of that amount had been raised. He then gave the registrar handling the subscription a blank cheque drawn on Griffiths and Lamb's bank account to cover shortfalls.

This made Griffiths and Lamb the underwriter of the subscription, which it was not authorised to do. He then allowed a company connected to one of the directors of the research company to pay sufficient funds to meet the minimum level, again without telling other investors.

The SFA, now part of the Financial Services Authority, said: "John Hallworth is no longer fit to be registered with the SFA in any capacity. And, although the directors of Griffiths and Lamb had been informed that this share subscription was unlikely to be successful, they failed to make any enquiries why and how the circumstances had suddenly changed."

Comments