Stockbroker Banned For “Reckless Misconduct”

29 May

 

 

The FSA has banned managing partner Gearge Leavey of First Colonial Investments LLP for “reckless misconduct”.

The regulator stated Mr Leavey was carrying out a significant influence function without FSA approval, failing to oversee the segregation and protection of client money and approving misleading financial promotions. 

First Colonial Investments LLP was a stock broking firm based in London. The firm provided services through sales advisers/reps who made telephone sales promoting higher risk securities in companies with small cap shares to retail clients. 

Mr Leavey’s responsibilities included the day-to-day running of the stock broking business, the company’s recommendations and sales of shares to clients. He is reported to have failed to register as an approved person, despite carrying out an influence role since its launch in 2006. It was also detailed that he also failed to address unsuitable sales practices by the sales advisers/reps.

The stockbroker received and held client money without having the approvals to do so. The FSA says Leavey, as the managing partner, should have ensured this was segregated from First Colonial Investments LLP’s own money. It is further documented that he failed to do so, and as a result, at least £883,897 of client money was mixed with the firm’s own asset and was used to pay business expenses at First Colonial Investments LLP and its unauthorised sister company.

Mr Leavey has referred the matter to the Upper Tribunal.

FSA acting director of enforcement and financial crime Tracey McDermott says: “Being a managing partner of a firm carries substantial responsibility for ensuring that the firm meets its regulatory responsibilities. We believe George Leavey was reckless in his approach to many aspects of the First Colonial Investments LLP business he was responsible for running.

“The approval of senior managers in authorised firms is a key part of the regulatory framework and a means by which the FSA ensures that authorised firms are properly run and comply with FSA rules. The range of serious regulatory failures in this case shows what can happen when a firm does not have suitable senior managers who are approved by the FSA.”

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