The Financial Services and Markets Tribunal has cleared Leeds firm Fox Hayes of negligence, overturning an earlier Financial Services Authority (FSA) decision.
The tribunal, which sat in London in June, ruled in favour of Fox Hayes, although the question of reducing an FSA penalty was complicated by the fact that former managing partner Robert Manning received secret commissions from a number of clients. He resigned from Fox Hayes on the final day of the hearing.
Between February 2003 and June 2004 Fox Hayes advised a number of unauthorised overseas companies on 20 financial promotions that subsequently attracted investments from UK citizens.
However, the FSA felt these promotions were not clear or fair and could have misled investors. It fined the firm £150,000.
It was revealed shortly before the hearing began that, without the knowledge of the firm, Manning had received six commission payments totalling $518,149 (£254,300). He said this sum related to personal losses from investing in the companies and were not income for the firm.
As the secret commissions came to light so late in the hearing, the tribunal said it was difficult to separate them from profits relating to the advice. A decision on the penalty will be made at a later date.