Wills and Co Stockbrokers

Wills and Co Stockbrokers Ltd formerly Grahame H. Wills and Co Ltd was one of the City’s oldest stock broking firms. Set up in 1883 as the financial services division of the Wills tobacco business, Wills and Co was in recent years a stockbroker specialising in smaller companies or 'small caps'.

They first crossed swords with the Financial Services Authority in October 2007 when they were fined £49,000 for giving poor risk warnings and misleading information to their customers. Wills and Co salesmen sold high-risk penny shares to unsuitable investors, many of these shares were owned by the firm itself, and they failed to outline the risks attached or explain the conflict of interests. Wills and Co were adding huge mark-ups to the share prices giving themselves a profit ranging from 2.9% to 173% and generally averaging 70% on the price the firm itself paid for the shares. The firms’ salesmen were adept at obscuring the mark-up. What makes this case particularly serious is that after the initial investigation, Wills and Co falsely told the FSA that corrective action had been taken and that the firm’s monitoring procedures were now robust and satisfied the FSA’s rules. The company was therefore able to carry on with its aggressive sales practices and the regulator rated the company as low risk which was plainly not the case.

The FSA visited Wills and Co in May 2008 to assess whether it had actually implemented the remedial actions identified and reviewed a sample of 19 transactions which were representative of the business undertaken after 2007. Three of the samples had been reviewed by Wills own internal monitoring function, however the FSA identified failings in all 19 transactions, a number of which related to the same, or similar, failings as highlighted in 2007. The FSA concluded that although Wills and Co had improved in some respects, it still continued to demonstrate the same or similar failures for which it was disciplined in October 2007 and the company had failed to take adequate steps to address the issues.

During the period January to December 2009 the FOS received 387 complaints referred to it about Wills and Co, finding 99% in favour of the consumer. The FSA communicated its concerns and proposed an own initiative variation of permission to stop the firm from advising on securities. The firm responded by employing a consultant, to review their monitoring arrangements and sales practices. This included reviewing a proportion of calls made by its advisers, as the majority of sales were made over the telephone rather than face to face. The consultant reported to the FSA’s Regulatory Decisions Committee but despite these reports, the FSA considered that the company continued to pose a risk to customers. Subsequently Wills and Co stockbrokers was referred to the Enforcement Division of the FSA where an investigation commenced.

During the course of the investigation the investigators, in line with their statutory powers, issued requirements on Wills and Co and in a number of cases the firm failed to co-operate and provide the information and documentation therefore on 16 February 2010 the FSA issue a public statement to censure Wills and banned the firm from giving investment advice on the purchase of securities.

On 25 March 2010, the FSA lodged a petition for the winding up of Wills and Co Stockbrokers in the High Court. The petition was heard on 28 April 2010 and consequently on 29 June 2010, Wills and Co was declared 'in default', meaning that they were unable or unlikely to be able to pay claims against them.

While it is true that the Wills and Co stockbrokers collapse is ‘low impact’ in terms of the wider financial crisis that has gripped the UK over the years, its impact on the reputation of stock broking and the damage it does to investors' confidence is significant.

When a company like Wills and Co is investigated by the FSA scams sometimes occur by companies targeting investors. These companies are commonly known as ‘recovery rooms’ and are unauthorised firms that cold calls investors and offer to buy their shares in return for the opportunity to provide recommendations on future investments. They often call from outside the UK and are not authorised by the FSA to approach UK investors. Always check the FSA Register to make sure a firm is authorised before doing business with them. If they're not authorised and things go wrong you won't have access to UK complaints and compensation procedures.

date added: 25/03/2013

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