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FSA dishes out £400k fine for multi-million pound boiler room scam

The Financial Services and Markets Tribunal has upheld an FSA decision permanently banning Atlantic Law senior partner Andrew Greystoke from working in financial services and fining him and the firm £400,000.

Greystoke “recklessly” signed off Atlantic Law’s approval of 50 UK investment advertisements, between December 2005 and March 2007, issued by four unregulated Spanish stockbroking firms without taking reasonable steps to ensure the advertisements were clear, fair and not misleading.

Greystoke accepted before the Tribunal that the Spanish firms were boiler room share scam operators.

He approved their advertisements despite seeing consumer complaints and press articles clearly warning of their activities and despite negative previous experience of acting for other Spanish boiler room clients.  

The FSA received 130 complaints from UK consumers who invested a total of over £3m in the scam. The FSA believes they will have lost the majority if not all of their investment and that the true loss is likely to be substantially more as many victims will not have complained.  

The advertisements offered free research reports on respectable listed companies.

Greystoke knew the FSA had previously published warnings that this technique was commonly used by boiler rooms to obtain UK consumer telephone contact details.

The FSA says the advertisements were misleading because their true purpose, which the Tribunal found to have been “blindingly obvious” to Greystoke, was to sell shares, whose value he knew to be at least doubtful. 

The Spanish companies subjected UK consumers who requested the reports to pressurised selling of high-risk illiquid shares in unlisted small companies. UK consumers who complained to the Spanish companies were subjected to threats and blackmail.

Director of enforcement and financial crime Margaret Cole says: “Atlantic Law and Andrew Greystoke acted recklessly, without integrity and with a complete disregard of the risks to consumers. The Tribunal’s decision supports our view that firms and individuals that assist boiler room operators should be brought to task. This has been a hard-fought case into which the FSA has put significant time and resources.

“It will send a strong message of deterrence to other firms and individuals that may be tempted to turn a blind eye to the legitimacy of their clients in exchange for fees or commission.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Incompetent Regulators Awards Team 13th May 2010 at 12:45 pm

    Another FSA failure, reactive regulations have never worked, just an excuse to collect some more bonus money for FSA staff!

  2. Pissed Off IFA 13th May 2010 at 1:03 pm

    Ride on I.R.A.T., once again I totally agree with you. Hopefully, Cable will replace the FSA with enligthened people such as yourselves.

    Had FSA been doing their job correctly from December 2005 to March 2007 this would never have happened. However, they did not and obviously a lot of money was earned by Greystoke and Atlantic Law sufficient to give them a good wedge and now a good wedge is going to the FSA.

  3. Michael Coulson Tabb 13th May 2010 at 2:53 pm

    Come on. Lets all face up to it. The FSA are a bunch of second rate, wannabe lawyers.
    If this organisation even vaguely lived up to its expectations of lot of the issues highlighted here and many other cases simply would have occured.

    I suppose the real question ius, when the FSA and it minions cock it up as they have done over the last 13 years, who oversees their failings and sets the record straight!!!

  4. Simon Mansell 13th May 2010 at 3:27 pm

    What? You mean a “professional” signed this group off in spite of all his exams and qualifications he still made mistakes?

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