Release Date: 13th March 2015

To access the original FCA document, click here.

Summary

Sam Kenny, the former chief executive of Gracechurch Investments Limited, has been fined £450,000 and banned from holding any position in the financial services industry by the Financial Conduct Authority (FCA). Kenny led the firm when it engaged in widespread mis-selling of small-cap stocks through pressure, misrepresentation, and unsuitable advice.

Key Points:

• Fined Individual: Sam Kenny, former CEO of Gracechurch Investments Limited
• Fine Amount: £450,000
• Reason for Fine: Misleading the regulator, engaging in pressure selling, misrepresentation, and unsuitable advice

Misconduct Details:

• Pressure Selling: Kenny and Gracechurch brokers used aggressive techniques to sell small-cap stocks to clients who often refused or had no funds to invest.
• Misrepresentation: Promotional documents for stocks contained material misrepresentations of their financial positions.
• Non-Compliance and Dishonesty: Kenny withheld a non-compliant sales call recording from the Authority, provided false information about meeting dates, and misled the Authority about handling conflicts of interest.

FCA’s Position:

Georgina Philippou, acting director of enforcement and market oversight at the FCA, emphasised that Kenny’s actions were serious, deliberate, and sometimes dishonest. His behaviour negatively impacted customers, who were pressured into buying risky stocks, and he attempted to cover up misconduct by misleading the FCA.

Key Takeaways for Other Firms:

• Integrity and Transparency: Firms must maintain honesty and transparency in their dealings with regulators.
• Compliance with Regulatory Requests: Promptly and accurately respond to regulatory inquiries and provide requested information.
• Ethical Selling Practices: Avoid aggressive sales tactics and ensure that investment advice is suitable for clients.
• Accurate Representations: Ensure that all promotional materials and representations about financial products are accurate and not misleading.

Conclusion:

This case highlights the FCA’s commitment to holding senior executives accountable for misconduct and reinforces the importance of maintaining high ethical standards and transparency in the financial services industry.