Financial adviser banned and fined after clients lose millions

16th September 2014

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A financial adviser has been banned and fined £300,000 after clients lost £2.2 million by following his advice to invest in companies that he controlled and described as “safe as houses”.

Peter Carron, formerly a senior partner at St James’s Place Wealth advised 11 clients to invest a total of £2.4m in three companies that he directed without properly disclosing this fact to them.

The clients later lost approximately £2.2 million when the companies went into liquidation between May and August 2010.

St James’s Place subsequently paid these 11 investors £1.9 million in compensation, although the City watchdog the Financial Conduct Authority has not criticised the firm.

Carron misled clients about the likely performance of their investments, by guaranteeing a return or providing unrealistic projections. Clients were told to expect returns equivalent to between 9 and 24 per cent per year.

He continued to reassure investors and advise them to invest, even when he knew his companies were in financial difficulties – in fact nearly £800,000 of investment was taken after he had signed accounts showing the companies were insolvent.

He also led clients to believe that the investments were approved or endorsed by St James’s Place, which was not the case.

Furthermore, Carron advised the clients to invest without assessing whether the investments were suitable for their needs as some had specifically requested a low-risk investment.

He told one client the investments were “as safe as houses”.

In August 2014, Carron was banned by the High Court for 13 years from acting as a director or managing or controlling a company.

Tracey McDermott, director of enforcement and financial crime at the FCA, says: “People go to advisers because they want expert help on how to make the most of their money.

“They are entitled to expect that their adviser will act in their best interests, not his own. Advisers should think very carefully and make clear and full disclosure if they are intending to advise clients to invest in ventures in which they have an interest.”

1 thought on “Financial adviser banned and fined after clients lose millions”

  1. Noo 2 Economics says:

    Given the “performance”of the housing market since the early 70’s with it’s various booms and busts and given that even the IMF has now acknowledged what I knew 20 odd years ago – that almost all the negative shocks to the UK economy and financial markets in the last 50 years had their origin in and emanated from the UK housing market, then alarm bells would be wailing for me when someone tells me that anything is “as safe as houses”.

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