FSA Fines UK Private Client Broker

Contributing Editor

18 August 2006

The UK’s Financial Services Authority has fined private client stockbroker Hoodless Brennan £90,000 ($169,763) for breaking a host of rules with its aggressive sales pitches. The FSA accused the London-based brokerage house of using “unacceptable sales practices” and “failing to treat its customers fairly” when selling shares of Knowledge Technology Solutions. The regulator added that the firm’s brokers were found to to have persuaded customers to take more stock than they appeared to want, and making unsubstantiated and potentially misleading claims about KTS's prospects. Brokers also used information about a contract between Hoodless and KTS that was not in the public domain as an inappropriate sales aid to persuade customers to buy KTS shares. "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,” said Margaret Cole, director of enforcement at the FSA, in a statement. “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.”