The Financial Services Authority has fined City Index Ltd 35,000 for producing misleading financial promotions for spread betting and contracts for differences between September and November 2003.
The firm has also been fined for failures in its systems and controls that allowed promotions to be distributed.
The FSA says this promotional strategy had the potential to attract customers to high risk investments without adequately describing the risks involved with spread betting and CFDs.
The City Index communicated financial promotions to the general public through daily national newspapers, magazines and on carrier bags used by selected sandwich shops.
FSA director retail themes division Anna Bradley says: “Potential customers must be able to discern the key risk of an investment as well as its benefits. This is particularly the case in relation to high risk activities such as spread betting where there is a risk that a customer could lose substantially more than the original deposit.”