The Financial Services Authority has fined Jay Rutland, formerly a broker at Pacific Continental Securities (UK) Limited, £30,000 and banned him from from performing any function in relation to any regulated activity. The fine was reduced from £160,000 on the grounds that it would cause Mr Rutland serious financual hardship.
From the FSA’s Final Notice for Mr Rutland:
“The FSA has decided to take this action as a result of Mr Rutland’s conduct as a senior broker employed by Pacific Continental Securities (UK) Limited (“PCS”) where he deliberately defied compliance procedures, acted against the interests of customers and disclosed inside information in order to improperly maximise sales by his team.
On four separate occasions between January and April 2007, Mr Rutland was responsible for drafting sales scripts to be used by PCS’s brokers when trying to sell shares to customers over the telephone in which scripts the risk warnings and risk factors normally used by PCS were significantly watered down. He circulated these sales scripts to brokers knowing that they had not been approved by PCS’s compliance department (or one of PCS’s two directors) and knowing that he was not permitted to circulate non-approved scripts.
In one of the four scripts, he also improperly disclosed inside information to his colleagues for use when trying to sell shares to customers. On about 27 March 2007, he obtained inside information that an AIM-traded company Provexis Plc (“Provexis”) had entered into an agreement (“the Collaboration Agreement”) with a major international company details of which would be announced shortly to the market. This information was not public and was price sensitive. Shortly thereafter, Mr Rutland circulated to brokers a sales script that contained inside information about the Collaboration Agreement and the forthcoming announcement. Again, he did so knowing that the script had not been approved by PCS’s compliance department (or directors) and knowing that he was not permitted to circulate non-approved scripts.
Mr Rutland therefore:
(1) disclosed inside information otherwise than in the proper course of the exercise of his employment; and
(2) encouraged brokers to disclose the same inside information when attempting to sell Provexis shares.”
See also: “The key cultural shift – of thinking about things from a consumer perspective – has not yet happened” – CEO designate of the Financial Conduct Authority.
