The Financial Services Authority (FSA) has today fined London-based investment bank and stockbroker Seymour Pierce Limited £154,000 for failing to establish effective controls to guard against employee fraud.
As a result of Seymour Pierce's failings, an employee was able to steal approximately £150,000 completely undetected from the firm's internal and private client accounts in 36 separate transactions over a three year period.
A number of the illicit transactions involved making unauthorised changes to static data (such as the client's name, address, bank account and payment instructions) on existing client accounts or taking advantage of dormant accounts. In one instance the employee transferred a personal trading loss into one of Seymour Pierce's internal accounts.
The employee was dismissed prior to the discovery of the misdemeanours which only came to light when his replacement noticed serious accounting discrepancies.
Margaret Cole, the FSA's director of enforcement and financial crime, comments:
"This is a serious failure on Seymour Pierce's part. The frauds were not sophisticated and could have been detected at a much earlier stage if the proper procedures had been in place.
"Fraud seriously undermines the integrity of our markets, so this fine is a timely reminder of the consequences for firms that fail to have in place robust systems and controls to prevent unlawful transactions of this sort."
Seymour Pierce agreed to settle at an early stage of the investigation meaning it qualified for a 30% discount. Without the discount, the fine would have been £220,000.
In deciding the scale of the fine, the FSA took into account a number of mitigating factors: Seymour Pierce co-operated fully with the authorities once the frauds had been discovered and instigated internal reviews into the failings and implemented new systems to protect against future failings. The firm also took steps to ensure that its affected clients were fully reimbursed.