The UK Financial Services Authority (FSA) has condemned Gracechurch Investments for misconduct, including using pressure-selling tactics with customers to invest in the shares of small companies which subsequently led losses of at least £2m for clients.
The market regulator would have imposed a monetary penalty of £1.5m had the company not been in liquidation.
The financial watchdog, however, has decided to penalize Gracechurch former chief executive Sam Thomas Kenny for £450,000 and barring him from holding a position in the financial services industry.
Kenny has referred the issue to the Upper Tribunal. According to FSA complaint, Kenny personally pressurized or fabricated material facts to clients and as a chief executive he trained and encouraged his employees to force clients.
The investment firm advised nearly 340 clients to buy about £4m of small company stocks, between 1 April 2008 and 4 November 2009. If investors had invested in eight of the top ten stocks sold by the firm, they would have lost 72% of their invested amount, claims FSA.
Additionally, the market regulatory agency has also prohibited former Gracechurch compliance officer Carl Peter Davey from working in the financial services industry.
FSA enforcement and financial crime director Tracey McDermott said high pressure sales tactics and systematic misrepresentation to clients are wholly unacceptable practices.
"The FSA will not tolerate firms coercing clients into buying financial products or services that aren’t suitable for them," McDermott added.