FSA fines broking firm, senior director
16 Apr 2010
As part of its ongoing clean-up operations against errant companies in the financial sector, the UK's Financial Services Authority (FSA) has fined Hythe Securities Limited (Hythe), a London-based stock broking firm, and its senior director Meenaz Mehta a total of £235,000 ($362,558) for putting customers at risk of aggressive sales tactics in penny share dealings.
The market regulator has also banned Mehta from holding senior positions in any firm selling penny shares to the public.
''Mehta's lack of action and leadership allowed Hythe to place the pursuit of profit above the protection of its customers. This is totally unacceptable,'' said Margaret Cole, FSA Enforcement and Financial Crime director.
Acting as the chief executive and holding controlled function 10 (compliance oversight), Mehta was responsible for the day-to-day running of Hythe. This included its retail group, the sales division which specialised in selling small cap or penny shares.
Hythe's retail group employed poorly trained advisers, paid them largely by commission, and pressurised them to meet sales targets or face disciplinary action, FSA said in a statement.
An investigation conducted by the regulator found that customers were exposed to the risk of receiving unsuitable advice because the firm's systems and controls were too weak to manage the risks generated by an aggressive sales culture.
