The Financial Services Authority (FSA) has banned George Leavey, the managing partner at stockbroking firm First Colonial Investments (FCI), for reckless misconduct.
Leavey's misconduct included carrying out a significant influence function without FSA approval, failing to oversee the segregation and protection of client money and approving misleading financial promotions, said the watchdog.
As managing partner, he was responsible for the day-to-day running of FCI, a London-based stockbroking firm whose sales advisers promoted higher risk securities in companies with small market capitalisations to retail clients.
Leavey failed to ensure client money was segregated from FCI's own money - resulting in £883,897 of client money being mixed with the firm's money and being used to pay business expenses. The firm was not authorised to hold client money.
In addition Leavey, who was responsible for his firm's recommendations and share sales to clients, failed to register as an approved person. This was despite the fact he had carried out a significant influence role at FCI since the firm started up in 2006, added the FSA.
He also failed to identify and remedy unsuitable sales practices by FCI's sales advisers.
The FSA's decision marks the third time it has taken enforcement action relating to the operations of FCI and Direct Sharedeal (DSL), of which FCI had been an appointed representative until March 2009.
In 2010, the FSA took enforcement action against both DSL and one of the partners at FCI, Gerald Classey.
Leavey has referred the latest matter to the Upper Tribunal where he and the FSA will present their cases before the tribunal determines what action the regulator should take.
"Being a managing partner of a firm carries substantial responsibility for ensuring that the firm meets its regulatory responsibilities," said FSA acting director of enforcement and financial crime Tracey McDermott. "We believe George Leavey was reckless in his approach to many aspects of the FCI business he was responsible for running."
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