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Former stockbrokers fined and banned for failing to protect client money

Thursday 9th October 2014

Two former stockbrokers have been banned and fined by the Financial Conduct Authority (FCA) for serious failings regarding client money protection. 
David Gillespie and David Welsby were Managing Director and Financial Director of wealth management firm Pritchard Stockbrokers. 
The FCA has also censured the firm for recklessly failing to protect client money and committing a number of specific breaches of the Authority’s client money (CASS) rules.  
Pritchard entered administration in March 2012 and, were it not for its financial position; the FCA has confirmed it would have imposed a fine of £4,932,600. 
Tracey McDermott, FCA Director of the Enforcement and Financial Crime Division said: “Ensuring that client money is properly protected is a basic, but fundamental, regulatory requirement.  Gillespie’s and Welsby’s conduct fell far short of our standards.  Their recklessness contributed to a shortfall of £3 million of client money and resulted in significant consumer detriment.”
The FCA has broken down Pritchard, Gillespie and Welsby’s failings into four distinct offences:
- Client money was wrongly used to pay business expenses;
- Pritchard failed routinely to pay sufficient funds into its client bank account to cover shortfalls in client money;
- Pritchard placed reliance upon the offshore facility as a client money resource despite the fact that such a facility was not permitted to be included; and
- The FCA was not informed when a shortfall in client money occurred.
As well as being banned from the financial services industry, Gillespie and Welsby have been fined £10,500 and £14,000 respectively.  
They both provided verifiable evidence of serious financial hardship. Had it not been for this reduction and a discount for agreeing settlement of their cases, the FCA has confirmed that their penalties would have been £144,000 and £72,000 respectively.

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Editorial Contact Details - Conor Shilling
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