Lawyer fined over boiler room scam

Published: 12:36PM BST 14 May 2010

Andrew Greystoke has been banned from working in financial services in any
capacity and fined £200,000, while Atlantic Law, at which he is a senior
partner, has also been fined £200,000.

The fine relates to Mr Greystoke's dealings with four unregulated Spanish
stockbroking firms, which were involved in boiler room scams, under which
high pressure sales techniques are used to sell worthless shares to
consumers.

It was imposed by City regulator the Financial Services Authority and upheld
by a Financial Services and Markets Tribunal today after an appeal.

The FSA said Mr Greystoke "recklessly" signed off Atlantic Law's
approval of 50 UK investment adverts on behalf of the Spanish firms between
December 2005 and March 2007.

It said he did this without taking steps to ensure the adverts were fair and
not misleading, and despite having reasons to doubt that the firms would
deal with UK consumers in an honest and reliable way.

Mr Greystoke accepted before the tribunal that the firms he was acting for
were boiler rooms.

But despite this, he still approved their adverts, even though he had seen
consumer complaints and press reports warning people about their activities,
and despite having previous negative experience of acting for boiler room
clients.

The adverts offered people free research reports on respectable listed
companies, a technique commonly used by boiler rooms to obtain people's
telephone numbers.

The tribunal found that the adverts approved by Mr Greystoke were misleading
because their true purpose, which it said would have been "blindingly
obvious" to him, was not to offer free reports but to sell shares, the
value of which he knew to be at least doubtful.

The Spanish companies subjected the UK consumers who signed up for the reports
to pressurised sales of high-risk, illiquid shares in unlisted small
companies.

People who complained to the Spanish firms were subjected to threats and
blackmail.

Around 130 people have complained to the FSA about the firm, with whom they
had invested £3 million. The regulator believes they will have lost much, if
not all, of this money.

It is thought that many other victims have not complained, and the tribunal
found that the true loss caused by the advertisements approved by Mr
Greystoke is likely to be substantially more than £3 million.

Margaret Cole, FSA director of enforcement and financial crime, said: "Atlantic
Law and Andrew Greystoke acted recklessly, without integrity and with a
complete disregard of the risks to consumers.

"The tribunal's decision supports our view that firms and individuals
that assist boiler room operators should be brought to task."

Boiler room scams are thought to cost the UK around £200 million a year.

The firms selling the shares are not regulated by the FSA, meaning consumers
do not have access to the Financial Ombudsman Service and Financial Services
Compensation Scheme if things go wrong.

The FSA received calls from more than 3,100 people who had been contacted by
boiler rooms during 2009, 734 of whom had become victims, losing an average
of £24,000 each.

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