The consequences of the exposure of fundamental failings in the way that Square Mile Securities conducted its stockbroking business, including the use of dishonest sales tactics (see our January e-bulletin) now include the fining and banning of Mohammed Suba Miah, one of Square Miles' sales force and an approved person with investment adviser status. This is the first time that the FSA has not only fined but also banned an approved person and, but for Mr Miah's decision to settle early, the fine would have been £30,000. Given that Mr Miah's annual basic salary at Square Mile Securities was £29,000, this reflects the seriousness of his breaches in the FSA's eyes.
The FSA found that Mr Miah had breached Principles 1 and 2 of the Principles for Approved Persons and in particular that he failed to act with integrity by intentionally and dishonestly writing out Square Mile trade tickets to record the apparent purchases of securities where Square Mile customers had not given their explicit agreement or consent to the transaction. In securing sales from customers, many of whom were elderly and vulnerable, Mr Miah employed a range of sales tactics (including repeatedly calling the customer, promising that this was the last investment he would ask for before returning with another investment proposal, and in one instance even seeking to persuade a customer who did not think that he had given an instruction to purchase, that he had), which the FSA concluded were unacceptable and which resulted in high and undue pressure on consumers. The FSA concluded that Mr Miah was dishonest, in breach of Principle 1, in 11 of the 19 transactions it reviewed in which he was involved between December 2005 and May 2006, which were concluded without client authorisation and which gave rise to client liabilities of approximately £114,000. The FSA also found that Mr Miah acted in breach of Principle 2 in that he failed to act with the due skill, care and diligence reasonably to be expected of an approved person by failing to provide risk warnings, making recommendations on the basis of insufficient knowledge about the client and employing unacceptable sales methods resulting in undue pressure on his clients to agree to the purchases he recommended.
In light of the severity of the penalty, the trenchant criticism by the FSA and the fundamental failings found at Square Mile and within its sales team, it remains to be seen whether yet further enforcement actions will be concluded arising out of the same circumstances