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When a broker has a personal interest

including wills and probate
Gostevie
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When a broker has a personal interest

#158537

Postby Gostevie » August 10th, 2018, 1:56 pm

Dear Fools,

Apologies if this is the wrong board to post this. It seems the best fit I could find.

I have been approached by an FCA regulated stockbroker that is trying to persuade me to buy shares in an unlisted private company. As part of my due diligence, I discovered that the individual broker who is doing the selling has (or at least had as of the company's most recent Confirmation Statement filed at Companies House) a personal shareholding in the company worth - at the price the placing shares are being sold for - in excess of £50k.

At no stage was any mention of this made to me by the broker concerned. Surely there must be a huge conflict of interest here. Can anyone confirm whether any rules were broken here please?

Many thanks,

Gostevie

pochisoldi
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Re: When a broker has a personal interest

#158547

Postby pochisoldi » August 10th, 2018, 2:18 pm

Googling for "fca conflicts of interest requirements" (without quotes) give this as the first link:

https://www.handbook.fca.org.uk/handbook/SYSC/10/1.html

Note that even if the holding is being held by the broker as nominee (i.e. not held personally but on behalf of another client), there is still a potential conflict of interest. (see SYSC 10.1.3).

Is the broker named at Companies House on the company's PSC filing? (That would really set the alarm bells ringing for me).

PochiSoldi

GoSeigen
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Re: When a broker has a personal interest

#158556

Postby GoSeigen » August 10th, 2018, 2:35 pm

Gostevie wrote:Dear Fools,

Apologies if this is the wrong board to post this. It seems the best fit I could find.

I have been approached by an FCA regulated stockbroker that is trying to persuade me to buy shares in an unlisted private company. As part of my due diligence, I discovered that the individual broker who is doing the selling has (or at least had as of the company's most recent Confirmation Statement filed at Companies House) a personal shareholding in the company worth - at the price the placing shares are being sold for - in excess of £50k.

At no stage was any mention of this made to me by the broker concerned. Surely there must be a huge conflict of interest here. Can anyone confirm whether any rules were broken here please?

Many thanks,

Gostevie


That sounds alarming, I hope it was not one of the big retail brokers. Would there be a legal problem with identifying the broker and the share on this board?


GS

Alaric
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Re: When a broker has a personal interest

#158564

Postby Alaric » August 10th, 2018, 2:47 pm

Gostevie wrote:I have been approached by an FCA regulated stockbroker that is trying to persuade me to buy shares in an unlisted private company.


Within recent memory, there have been stockbrokers who would promote shares where they, or associates, had an interest. Generally speaking several of these businesses went out of business usually with compliance failings following FCA investigation.

But it does occur to me that if you wanted to promote the sale of shares in an unlisted private company which you owned, that you would probably need FCA permission and that might take the form of "regulated stockbroker".

You've got more protection than you would have if it was some outfit based in Spain, but what's the quality of the private company?

Gostevie
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Re: When a broker has a personal interest

#158571

Postby Gostevie » August 10th, 2018, 2:57 pm

pochisoldi wrote:Googling for "fca conflicts of interest requirements" (without quotes) give this as the first link:

https://www.handbook.fca.org.uk/handbook/SYSC/10/1.html

Note that even if the holding is being held by the broker as nominee (i.e. not held personally but on behalf of another client), there is still a potential conflict of interest. (see SYSC 10.1.3).

Is the broker named at Companies House on the company's PSC filing? (That would really set the alarm bells ringing for me).

Thanks! I thought that might be the case. (The individual concerned is not a Person with Significant Control.)

GoSeigen wrote:That sounds alarming, I hope it was not one of the big retail brokers. Would there be a legal problem with identifying the broker and the share on this board?


Not one of the big brokers. I'd prefer not to mention them by name publicly at this stage. I'll get back to him and see how he reacts. ;)

Gostevie

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Re: When a broker has a personal interest

#158782

Postby Slarti » August 11th, 2018, 4:18 pm

Gostevie wrote:I have been approached by an FCA regulated stockbroker that is trying to persuade me to buy shares in an unlisted private company.


Is this someone you've done business with before, or a cold call?
If a cold call, probably a scam, avoid.

How do you know that the person who contacted you is who they say they are?


Also, in the normal course of things, how often do stockbrokers deal in unlisted private company shares?


I've worked for and with quite a large number of Ltd companies and even unlisted plcs and I don't think that they had stockbrokers involved in dealing with their shares, unless about to go public.


Sounds altogether like bargepole time to me.

Slarti

Clitheroekid
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Re: When a broker has a personal interest

#158864

Postby Clitheroekid » August 11th, 2018, 10:58 pm

I'd have thought the obvious thing to do would be to contact the FCA and ask for their comments.


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