Stockbroker Betton banned by FSA
GRAHAM Betton, a former Manchester stockbroker with Siddall and Co and latterly SP Bell , has been banned from working in financial services for his part in a scheme to ramp-up the share price of a shell company.
Mr Betton is likely to be fined for his role regarding Fundamental-E Investments. In May his former colleage at SP Bell, Simon Eagle was fined £2.8m by the Financial Services Authority.
Mr Betton was a director of SP Bell in 2003 when it was acquired by Simon Eagle, who also owned 85% of Fundamental-E Investments, an AIM-listed shell company.
The FSA said Mr Eagle and acquired SP Bell in order to sell FEI stock to its clients, generating demand for the stock and pushing its price up.
In its judgement the watchdog said: “Betton instructed SP Bell staff to sell FEI shares to clients, many of whom were unaware that the shares were being bought and sold on their behalf.
“In order to defer clients having to pay for the shares, many of the trades were rolled over from client to client without being settled. Betton was aware that the purpose of the scheme was to defer payment for the shares indefinitely and he personally executed at least 75 rollover trades of in excess of 340 million shares in FEI.”
The FSA said Mr Betton, who had 30 years’ stockbroking experience, was “integral” to the success of the scheme.
“Betton knew that there was a clear risk that many clients had not authorised their trading in FEI shares and that their apparent demand for FEI shares was not genuine.
The Authority said it would be: “Wrong, damaging to market confidence and indeed unthinkable if Mr Betton were allowed to continue operating in the financial services sector”.
As well as Mssrs Eagle and Betton, market maker Winterflood Securities, which handled many of the trades, was also fined by the FSA.
Margaret Cole, managing director of enforcement and financial crime at the FSA, said: “This marks the final chapter of a scheme which saw the share price of Fundamental-E Investments deliberately manipulated to the detriment of ordinary investors.
“Betton was an experienced director of an FSA authorised firm. He knew that the trading for his clients was artificial and he worked closely with Winterflood and its traders to artificially raise the price of the stock. This betrayed his duty to his clients and as the tribunal has agreed was damaging to market confidence.”
Trading in FEI shares was suspended in July 2004 leaving over £9m of unsettled trades which neither SP Bell nor its clients could meet. SP Bell ceased trading and went into administration.
