Law Firm, Two Men Fined Over Lehman-Backed Structured Products
Thorntons Law LLP, which provides investment advice to customers under the brand name, Thorntons Investment Services, and one of its partners, Michael Royden, along with Robert Peter Yarr of McMcClelland Yarr Financial all have been fined by the Financial Services Authority (FSA) for failures in connection to sales of structured products backed by Lehman Brothers Holdings.
As reported Sept. 22 by the Wall Street Journal, the FSA ruled that Thorntons Law Firm failed, in some instances, to provide suitable advice to its customers regarding the products. Royden was cited for compliance oversight, while Yarr failed to fully understand and warn customers of the counterparty risk associated with structured products. The FSA also said that Yarr neglected to keep adequate records, conduct product research and ensure sufficient compliance oversight and management at the firm.
“Firms and individuals giving investment advice must properly assess their clients’ needs and make suitable recommendations,” said Margaret Cole of the FSA.
“They must also have the necessary systems and controls in place to ensure that this happens. This is vital when it comes to products which put customers’ capital at risk and we have repeatedly reminded firms that the risks must be communicated to customers in a way which is fair, clear and not misleading.”