The story starts on the 13thth of May 2010 when The senior partner at London firm Atlantic Law had been banned by the City watchdog from working in financial services and along with his firm, fined £400,000 in total for ‘recklessly’ signing off adverts issued by Spanish fraudsters.
The Financial Services and Markets Tribunal has upheld a Financial Services Authority (FSA) decision that Andrew Greystoke ‘recklessly signed off Atlantic Law’s approval of 50 UK investment advertisements’ issued by four unregulated Spanish stock-broking firms ‘without taking reasonable steps to ensure that the advertisements were clear, fair and not misleading and despite having reason to doubt that the Spanish firms would deal with UK consumers in an honest and reliable way’.
The FSA said that Greystoke accepted these Spanish firms were boiler room share scam operators, and approved their advertisements despite seeing consumer complaints and press articles warning of their activities, and having negative previous experience of acting for other Spanish boiler room clients.
The advertisements, approved by Greystoke, offered free research reports on respectable listed companies but were misleading because their true purpose was not to offer the free reports, but to sell shares the value of which he knew to be at least doubtful.
The FSA said that the Spanish fraudsters subjected 130 UK consumers to pressurised selling of high-risk illiquid shares in unlisted small companies, and that any UK consumers who complained to the Spanish companies were threatened and blackmailed. The 130 investors told the FSA they had invested a total of more than £3m, which they are likely to lose.
Atlantic Law and Greystoke were fined £200,000 each. Greystoke could not be reached for a comment.
FSA director of enforcement and financial crime Margaret Cole 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. This has been a hard-fought case into which the FSA has put significant time and resources. It will send a strong message of deterrence to other firms and individuals that may be tempted to turn a blind eye to the legitimacy of their clients in exchange for fees or commission.’
The tribunal hearing took place between 1 and 10 March.
The FSA estimates that share fraud costs the UK £200m a year. It said that 734 people lost an average of £24,000 each from boiler room scams last year, putting total losses to boiler rooms at £17m annually.
On the 17th of July 2014 last year it was reported that A solicitor involved in a boiler-room scam to shove financial products to clients has been suspended from practice for 18 months as a punishment.
Andrew Greystoke, of London firm Atlantic Law, signed off the approval of 50 UK investment advertisements issued by unregulated Spanish stockbroker firms.
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Greystoke did so without taking reasonable steps to ensure the advertisements were clear, fair and not misleading.
He also approved them despite having reason to doubt that the firms would deal with UK consumers in an honest and reliable way – and despite being aware of complaints about them.
Greystoke had already been banned from working in any capacity in financial services by the Financial Services Authority following a prosecution in 2010. He and the firm were each fined £200,000.
In a case brought last week by the Solicitors Regulation Authority, the SDT decided that Greystoke’s involvement meant he had acted with a lack of integrity; behaved in a way which compromised or impaired his good repute or that of the profession; behaved in a way that was likely to diminish the trust the public placed in him or in the legal profession; and compromised his independence.
The tribunal said that, by authorising boiler-room operators – so called because they involved high-pressure selling – he had failed in his role as gatekeeper and the public suffered harm as a consequence.
Greystoke, who did not attend the hearing, said in a written statement that he maintained a genuine belief his actions were lawful, and that he was taken advantage of by the foreign companies.
In a statement released in July 2014, Greystoke said:-
This prolonged, expensive and unnecessary regulatory investigation has underlined two simple truths: first, that I was naïve but not responsible for eventual investor losses; and second, that I did not compromise my honesty or integrity – both of which I have maintained in my practice at all times. This decision is a vindication of my position and is consistent with no fine or effective sanction being imposed on me by the SDT.
The SRA has known from the outset that I was prepared to remove myself from the solicitors’ roll and that I do not have the funds to pay costs incurred by the SRA simply to order this superfluous suspension. The SRA was advised at the outset that I no longer practise as a solicitor and have no intention of doing so.
I had no reason to believe the companies were acting as boiler rooms until after the FSA presented evidence at tribunal which had hitherto been hidden from me. I was totally unaware during my dealings with the companies that there were any outstanding complaints, yet the FSA were aware of thousands and deliberately kept me in the dark. The FSA has always accepted that had I been aware of these complaints, I would have no longer issued financial promotions approvals for these companies.
The FSA and SRA proceedings have consumed more than £900,000 of public and the profession’s money without hope of any significant recovery.
The unwitting investors of tomorrow are unlikely to take comfort from a regulatory regime which fritters away funds on misdirected vanity prosecutions.’
But the tribunal decided Greystoke had no insight into the effect his conduct had on victims, and took the decision to suspend him, as well as ordering him to pay £80,000 towards costs.
Gordon Ramsay, SRA director of legal and enforcement, said: ‘The principles that solicitors are obliged to uphold are there to protect consumers. These consumers in turn place their trust in solicitors to make sure their interests are protected.
‘Mr Greystoke admitted to the FSA that he approved advertisements for these Spanish firms despite knowing of complaints about the schemes. He failed to uphold the principles and betrayed the trust put in him by members of the public.’
Greystoke has not practised as a solicitor since 2011 and does not currently have a valid practising certificate.
He has 21 days from the publication of the SDT’s decision to appeal. According to Companies House records, Atlantic Law was dissolved in April this year losing £194,662.00.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk