Broking duo appeal over FSA ban

THE Financial Services Authority is facing an anxious wait for a decision in a groundbreaking appeal brought by two City brokers against an earlier ban.

Lawyers for Geoffrey Hoodless and Sean Blackburn, former chairman and chief executive respectively of small-stocks broker Hoodless Brennan & Partners, have accused the FSA of acting out of all proportion by imposing an outright ban rather than fining the pair for their role in a £2.5m share placing for a client three years ago.

A hearing at the financial services and markets tribunal ended yesterday and a decision is expected in a few weeks.

The FSA has accused Hoodless and Blackburn of hiding information about the placing because the broking firm faced 'both economic and reputational risk'.

The hearing has attracted widespread interest in City circles as it is the first time an appeal has being made to the tribunal since the FSA gained its powers as the City's sole regulator in 2001.

It is also a rare open hearing involving evidence garnered by the FSA during its investigation. The tribunal was public because Hoodless and Blackburn are appealing against a bar on their working in the City which had already been announced by the regulator.

FSA lawyer David Mayhew alleged the pair acted with a 'lack of veracity' in their explanations as to when they first realised the placing for AIM-listed PrimeEnt was in fact £750,000 short.

A statement to the Stock Exchange on 30 March 2000 said the placing was complete. The pair's legal team, led by solicitor Catherine Littmann of Littmanns, has argued that the brokers were not culpable, that other parties involved in the share placing were more responsible and that the ban was too harsh a punishment.

'Geoff and Sean are being made to carry the can for fundamental errors of everyone involved,' said the pair's barrister, Alexander Cranbrook. 'If big banks break the rules, they get away with a fine or a warning - my clients face a ban. It is not proportionate.'

The hearing came as FSA chief executive-designate John Tiner promised a shake-up of the organisation. Regulatory processes head Carol Sergeant said yesterday that the FSA was 'looking very hard at how it could make the disciplinary procedure more transparent'.