Rowan Dartington & Co., a Bristol, England-based stockbroker owned by Astaire Group, was fined 511,000 pounds ($740,000) for not keeping client money in trust accounts that would protect it in case the firm went bankrupt, the Financial Services Authority said in a statement. Close Investments Ltd. was docked 98,000 pounds for similarly not segregating accounts, the regulator said in a separate statement.
“It is essential for firms to adhere to our client money rules, and recent action in this area shows that our focus has intensified,” FSA enforcement director Margaret Cole said. “Firms should be in no doubt that if they fail to get their house in order in this regard we will take action.”
Today’s fines come less than a week after JPMorgan Chase & Co.’s London unit was fined a record 33.3 million pounds for not separating as much as $23 billion of client money from the firm’s accounts over seven years. The FSA had been criticized for failing to ensure Lehman Brothers International Europe, which went into administration in September 2008, had kept client money separate.
No clients lost money because of the errors and both firms received a 30 percent discount on their fines for cooperating. Close reported the problem on its own, the FSA said.
“Not only has Rowan Dartington’s cooperation with the FSA resulted in a much reduced fine than would otherwise have been the case, but it has also helped to develop an operationally strengthened and more robust service to clients,” Astaire Group said in a statement today.
Close Investments failed from the start of 2008 to January 2010 to verify that accounts relating to unregulated collective investments it managed were correctly set up as client money accounts, the FSA said.
Close Investments “alerted the FSA to the inadvertent breach and has been working constructively with the FSA throughout their investigation,” Anthony Silverman, a spokesman for the London-based company, said in an e-mailed statement. “This has included putting in place measures to rectify the breach as well as a review of client asset procedures.”
Rowan Dartington was also unable to show it could recover up to 1.4 million pounds of its own net assets in its accounting records and has since written off 1.04 million pounds, the FSA said.
The firm “will continue, with external assistance, to seek to identify and subsequently recover these monies over the forthcoming months,” Astaire Group said.