FSA bans brokers for misusing client funds

Two Aberdeen-based stockbrokers were yesterday banned from working in the UK financial services industry by the Financial Services Authority after they were found to have misused clients' money.

Barry Scott, the chief executive of Barum House Securities, an Aberdeen-based broker, was discovered to have used client money given to him to invest to pay off his own overdraft to the tune of £65,000.

Eighteen months later Mr Scott pretended to repay the money by selling investments that belonged to the same client.

The FSA also found that Lata Gaur, a stockbroker at the same firm, had used £30,000 of client money to buy a stake in the firm for herself and her husband, as well as buying and selling shares for clients without their knowledge or consent.

The financial regulator yesterday said Ms Gaur tried to cover up her unauthorised trading after it had been discovered, by asking clients to give her backdated authorisations and a good character reference.

Mr Scott was also found to have covered up the precarious financial state of the firm, taking £40,000 of investors' funds and using it to make the firm look as if it was meeting regulatory solvency requirements.

The stockbroking firm was put in to liquidation in March 2001 with losses of £490,000. According to the financial regulator, Mr Scott left the country shortly afterwards and is now living in New Zealand.