Pacific Continental Securities was a stockbroker who specialised in promoting investment in smaller companies to private shareholders (this included AIM companies, and at one time US Regulation "S" stocks, when the latter can be difficult to sell). In June 2007 Pacific Continental was barred from taking on new business by the FSA, and soon after went into Administration. The Administrator is Smith & Williamson and certain assets including the client list have been sold to a recently formed company named Caspian Stockbrokers for an undisclosed sum.

Incidentally of course Pacific Continental was a company that received lots of negative press coverage about its investment activities and advice to private shareholders. We understand that more than one UKSA member personally complained to the FSA about it, and we made certain representations also. One only has to read the articles written by Tony Hetherington of the Daily Mail (see the Thisismoney web site) to understand why most investors will not regret the passing into history of this company. The company was awarded the Guardian Money accolade as "the worst investment firm of the year" last December.

Note that Pacific Continental is not the only company that has actively promoted investment in small-cap shares to private investors while acting as "principal", ie. while holding the shares themselves or in some associated business for onward sale to investors. UKSA believes that the regulation of such activities should be tightened up, and our recommendation would be that investors should not be permitted to be sold shares where the broker is acting as a principal (ie. not giving an independent, unbiased recommendation to the client) unless there are much stronger health warnings about the non-independence of the broker.  These should be made, and signed off by the client, on every such transaction so as to avoid any doubt that the clients are totally clear that they should have done their own research before investing in the stock.

Postscript: Note that Caspian Stockbrokers was renamed as Brooklands Securities on the 23rd July 2007 (see www.brooklandssecurities.com). Although the company is operating from the same address as did Pacific Continental (80 Cannon St, London EC4N 6HL), the new chief executive, Stephen Alexander, has assured us that there is no connection with the former company and that they will be operating a more general stockbroking service with no emphasis on promoting small cap, illiquid stocks.

Note that UKSA issued the following press release in September 2007 when the problems of shareholders who had previously purchased shares from Pacific Continental Securities (UK) Ltd came to light: Press044_Nominee_Problems . It highlights the dangers of nominee accounts.