David John Gillespie, Managing Director of a stockbroking company, has been disqualified for 8 years for causing Pritchard Stockbrokers Ltd (Pritchards) to both mislead the then Financial Standard Authority (FSA) and to trade in breach of financial rules and regulations regarding the use of client monies.
As a result, losses to clients have been estimated at 2,964,652.
In addition, the companys Financial Director, David Alan Welsby, has been disqualified for 6 years for allowing Pritchards to both mislead the then FSA and to trade in breach of financial rules and regulations regarding the use of client funds. Both Mr Gillespie and Mr Welsby were also fined and banned, and Pritchards censured, by the FSAs successor, the Financial Conduct Authority (FCA), on 9 October 2014 for serious failings in relation to the protection of client money.
In Mr Gillespies case, for the purpose of the disqualification undertaking, he did not dispute that he also caused or knowingly allowed the company to give unsuitable advice to a client, leading to a 235,000 loss to that client. This regarded an investment in a company, of which Pritchards itself was a shareholder.
The disqualifications, from 3 and 2 December 2015 prevent Mr Gillespie and Mr Welsby respectively, from directly or indirectly becoming involved in the promotion, formation or management of a company for the duration of their disqualification terms.
Commenting on the disqualifications, David Brooks, Group Leader at The Insolvency Service, said:
Although there was no evidence of personal benefit by either Mr Welsby or Mr Gillespie, their actions in such a highly regulated industry, resulted in shortfalls in client funds to continue from at least 2008.
They have asserted that such a breach of the rules was covered by facilities offered by two companies associated with the companys Company Secretary. However, the evidence filed at court showed that one set of guarantees were not compliant with either the financial regulations, or the companys own legal advice. The second facility was never formalised in any legal sense.
Regarding Mr Gillespie, he is also responsible for a failure of Pritchards duties to a particular client, who has lost a considerable sum as a result of a clear conflict of interests. As an experienced member of the financial services industry he should have taken steps to avoid such a conflict.