Dundee-based law firm Thorntons Law, which provides investment advice as Thorntons Investment Services, has been fined £35,000 (about $53,000), with a separate fine of £10,500 for one of its partners, Michael Royden.

This follows an FSA review of the marketing and distribution of structured products, particularly those backed by Lehman Brothers, concluded in October 2009. 

The FSA found that, in relation to its sales of Lehman-backed structured products, Thorntons did not give suitable advice to its customers in some cases.  In particular, Thorntons made recommendations to clients to invest in structured products when they could not afford to lose money; recommended that a high concentration of savings and investment portfolios be placed in structured products; used misleading phrases to describe structured products in letters to customers such as “absolutely no risk to capital”; and failed to implement and maintain appropriate compliance monitoring.

Michael Royden, the partner at Thorntons responsible for compliance oversight, had no financial services experience prior to taking responsibility for Thorntons Investment Services. He failed to adequately inform himself about Lehman-backed structured products prior to Lehmans’ insolvency and delegated day-to-day compliance tasks to another person and failed to put in place adequate systems and controls to collate management information about Lehman-backed structured products.

The FSA has also fined Robert Peter Yarr, a financial advisor at the Belfast IFA firm McClelland Yarr, £28,000 for similar failings.

Many private clients of other firms lost money when Lehman’s went bust in September 2008.

Thorntons, Royden and Yarr co-operated fully and agreed to provide redress where appropriate, settling at an early stage and qualifying for a 30 per cent discount.