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FSA fines stockbroker Seymour Pierce £154,000 for fraud failings

The FSA has fined London-based investment bank and stockbroker Seymour Pierce Limited £154,000 for failing to establish effective controls to guard against employee fraud.

The FSA says as a result of the company’s failings, an employee was able to steal £150,000 completely undetected from the firm’s internal and private client accounts in 36 separate transactions over a three year period.

A number of the illicit transactions involved making unauthorised changes to static data such as the client’s name, address, bank account and payment instructions on existing client accounts or taking advantage of dormant accounts.

In one instance the employee transferred a personal trading loss into one of Seymour Pierce’s internal accounts.

The employee was fired prior to the discovery of his actions which only came to light when his replacement noticed serious accounting discrepancies.

The FSA says Seymour Pierce has taken steps to ensure that affected clients were fully reimbursed.

Seymour Pierce agreed to settle at an early stage of the investigation meaning it qualified for a 30 per cent discount on the original fine of £220,000.

FSA director of enforcement and financial crime Margaret Cole says: “This is a serious failure on Seymour Pierce’s part. The frauds were not sophisticated and could have been detected at a much earlier stage if the proper procedures had been in place.

“Fraud seriously undermines the integrity of our markets, so this fine is a timely reminder of the consequences for firms that fail to have in place robust systems and controls to prevent unlawful transactions of this sort.”

City law firm CMS Cameron McKenna partner Simon Morris says: “Three years have passed since the FSA’s first major employee fraud fine so it is surprising to find a firm that has apparently done so little to protect itself and its clients against staff fraud.

“All firms should heed this latest warning and redouble their efforts to ensure that their systems and controls are adequate to safeguard against both internal and external misfeasance.”


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