Sam Kenny, the former chief executive of Gracechurch Investments Limited (Gracechurch), a stockbroking firm that is now dissolved, has been banned from holding a position in the financial services industry and fined £450,000 by the Financial Conduct Authority (FCA/the Authority).
Mr Kenny led Gracechurch when it routinely mis-sold small-capitalised stocks through pressure, misrepresentation and unsuitable advice. Mr Kenny used pressure selling techniques himself.
Mr Kenny also made the decision to withhold from the Authority a non-compliant sales call recording that it had requested, deliberately caused Gracechurch’s lawyers to provide to the Authority false dates of meetings of a particular Gracechurch committee and misled the Authority about how the firm handled a conflict of interest with its clients.
Mr Kenny referred to the Upper Tribunal the then Financial Services Authority’s (FSA/the Authority) 2012 decision to take enforcement action. The Upper Tribunal has recently struck out Mr Kenny’s reference, after Mr Kenny failed to comply with a direction of the Upper Tribunal that he provide a witness statement, enabling the FCA to issue its final notice, which reflects the FSA’s 2012 decision.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, said:
"As CEO of Gracechurch, Mr Kenny was involved in serious, repeated and at times deliberate misconduct. On a number of occasions this amounted to dishonesty. Mr Kenny’s behaviour impacted the customers of Gracechurch, who were pressured into buying risky stocks.
"Mr Kenny has now been held to account for Gracechurch’s mis-selling and the lack of integrity in his dealings with the Authority. This significant fine and ban sends a strong message to those who run financial services firms, that they will be made to answer for misconduct and that we will take particularly seriously attempts to cover up misconduct by trying to mislead us with false information."
Between April 2008 and November 2009, Gracechurch advised approximately 340 clients to buy about £4 million of shares in small-capitalised companies, which were not listed on the main market.
A sample review of Gracechurch broker calls showed that brokers persistently ignored refusals by several clients to buy stock, repeatedly made calls to particular clients until the clients were persuaded, ignored clients’ protests that they did not have any funds to invest and ignored or brushed off client requests for information in relation to the stocks. This all happened while Kenny was chief executive of Gracechurch.
A sample review of documents used by Gracechurch’s brokers in promoting nine stocks showed that documents concerning four of the nine stocks contained material misrepresentations of the financial position of the stock.
In December 2012, the FCA publicly censured Gracechurch and banned former Gracechurch compliance officer Carl Davey from holding a position in the financial services industry. The FCA would have fined him £175,000 had it not been for the serious financial hardship the fine would have caused him and would have fined Gracechurch £1.5 million but for the fact that the firm was in insolvent liquidation and had no assets.
Notes to editors
- The Final notice for Sam Thomas Kenny.
- The Final notice for Gracechurch Investments Limited (in liquidation), 20th December 2012
- By striking out a reference made to the Upper Tribunal, the Tribunal takes the decision to end a case, before the Tribunal forms a judgment on the evidence. A decision to strike out a reference can be taken for a variety of reasons, including where a party fails to comply with Tribunal directions.
- On 1 April 2013, the FCA became responsible for the conduct and supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.