FSA fines Hythe £200,000 for penny shares sales offences

London stockbroker Hythe Securities was today fined £200,000 and its senior director Meenaz Mehta fined £35,000 and banned from working at any firm selling penny shares.

The Financial Services Authority said Hythe had set up an offshoot selling small cap or penny shares which was badly run and supervised.

It employed 27 agents paid small salaries who relied on commissions earned on the shares they could sell to private investors. These ranged from 0.5 to 5% of the shares' sales and the agents were pressured to make sales or face disciplinary procedures.

Hythe's supposed supervisor checked only 35 out of 2383 share sales made over the phones. But agents were caught boasting about how much they expected specific shares to rise in value and referring to research notes which did not exist.

One client was told "we expect them to go up between 25% and 30% over the next pursuant weeks and thereafter".

Margaret Cole, head of enforcement at the FSA, said: "Mehta's lack of action and leadership allowed Hythe to place the pursuit of profit above the protection of customers."