FSA

23/09/2009

The FSA’s Director of Small Firms and Contact Division Lesley Titcomb has warned firms  selling low value shares to ‘get their house in order’ following reports that some stockbrokers are targeting the over-50s by aggressively marketing shares to them. Firms breaking the rules risk being referred to the FSA’s Enforcement division.

Certain stockbrokers target those who already own a few shares acquired through privatisations.  In pursuit of earning a commission the stockbrokers may sell shares unsuitable for the buyer’s situation.

The FSA advise consumers thinking of buying penny shares that they should familiarise themselves with the risks. Buyers should ask the broker why the particular share is suitable for their circumstances.  Advice taken from the stockbroker should be researched and verified.  Buyers should also ask about the commission the broker will receive for arranging the deal.

Practices adopted by those selling Contracts for Difference (CFDs) will also be scrutinised by the FSA throughout autumn. These high risk investments allow customers to speculate on the movement of share prices but also leave the customer open to losing more than the value of their original investment.

Source: http://www.fsa.gov.uk/pages/Library/Communication/PR/2009/123.shtml
FSA Press release reference - FSA/PN/123/2009
Entitled: FSA warns penny share customers dated 16 September 2009

If you have any concerns or queries regarding the FSA’s Enforcement process and powers or the issues raised in this article contact Sarah Wallace on 020 7421 3883 or make an online enquiry.