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London law firm Atlantic Law has been fined £400,000 for its part in an illegal boiler room share fraud.
The Financial Services and Markets Tribunal has upheld the FSA’s decision to fine Atlantic Law and ban founding partner Andrew Greystoke from working in financial services in any capacity.
The tribunal heard that Greystoke signed off his firm’s approval of 50 UK investment advertisements from four unregulated Spanish stockbroker firms between December 2005 and March 2007.
According to the FSA, Greystoke signed off the advertisements despite having ample evidence to question the professional integrity of the Spanish firms, including consumer complaints, press reports and FSA warnings.
Under the promotions, the Spanish companies targeted individuals who owned shares and offered a free research report on the company concerned. Anyone accepting the report authorised the company to make telephone contact - a technique frequently used by boiler rooms to obtain the personal details of UK consumers
The Spanish firms then subjected the consumers to high-pressure and sometimes threatening sales techniques. Around 130 British consumers complained to the FSA. Their investments totalled more than of £3m, but the true cost of the scam is believed to be much higher.
The FSA’s director of enforcement and financial crime Margaret Cole said: “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.”
Greystoke was described in the tribunal report as a “solicitor of high intellectual ability and considerable experience”.
According to the report, “his career suffered reverses,” and following litigation with Lloyd’s of London he was made bankrupt in 1996. He founded Atlantic Law in 1999 with the firm converting to an LLP in 2005.
The FSA is attempting to crack down on boiler room share scams, which it estimates cost the UK economy around £200m a year. Victims on average lose around £24,000, though its believed that only 10 per cent of victims report the crime.