Seymour Pierce fined over three-year fraud
London stockbroker Seymour Pierce has been fined by the Financial Services Authority for failing to prevent fraud, after a member of its settlements team stole £150,000 (€163,254) over a period of three years, according to the FSA. The offender's crime was only discovered after his dismissal for a separate breach of conduct, when his replacement noticed irregularities.
The FSA announced today that it had fined Seymour Pierce £154,000 for failing to establish effective controls to guard against employee fraud. Seymour Pierce qualified for a 30% discount on the fine, having agreed to settle at an early stage.
Margaret Cole, the FSA’s director of enforcement and financial crime, commented: “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."
According to the FSA's final notice, the offender, dubbed Mr A, worked in a small team in settlements alongside "one or two other members of staff". Between May 2003 and April 2006, the offender was able to steal £149,165 via 36 separate transactions. Around half of this amount was taken from Seymour Pierce, and half from the stockbroker's clients.
Seymour Pierce dismissed Mr A in July 2006 and his replacement discovered one of the frauds in January 2007. Further investigations led to the finding of the other frauds. It is understood that Mr A was dismissed for a seperate breach of conduct at Seymour Pierce, and is set to face sanctions individually from the FSA. A spokesman for the FSA said he could neither confirm nor deny that this was the case.
The London stockbroker now has 14 days to pay the fine in full.
Speaking to Financial News, Richard Feigen, managing director of Seymour Pierce, said: "When our compliance and monitoring procedures first revealed that we had been the victim of a determined and systematic fraud, we took immediate action, investigated the full extent of it, ensured that no clients had suffered any loss and notified the authorities, including the FSA. We did a complete review of our systems and controls. I'm glad this is over now".
The fine is the latest in a spate of actions by the FSA. Yesterday, the regulator censured two Dresdner Kleinwort bankers for trading on inside information, while in September the regulator fined Barclays £2.45m after it found that nearly all of the bank's reportable transactions had data errors over the 12 months following the implementation of new trading rules in Europe.
– write to: mturner@efinancianews.com
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