A London firm that transferred more than £333,000 to fraudsters posing as property vendors has been rebuked by the Solicitors Regulation Authority.
Perry Hay & Co, based in Richmond, admitted paying money due to its clients to a bank account controlled by an unrelated third party, and leaving a client shortfall of almost £50,000 for 36 weeks.
According to a regulatory settlement agreement published this week, the firm had been instructed to act for a married couple, referred to as Mr and Mrs L, in relation to the sale of a property. The transaction was carried out through emails between the clients and Henna Lynch, a partner at the firm.
Contracts were exchanged on 20 February 2015 and five days later Lynch’s secretary emailed Mr L asking him to provide bank details to enable the transfer of proceeds. The details were sent the same day. The firm then received another email purporting to be from Mr L, asking it to await the details of a new bank account, which were provided the next day.
The firm emailed the sender to confirm the name of the bank and account holder, details which were quickly confirmed by a further email purportedly from Mr L.
Lynch authorised the payment without contacting Mr L by any other means of communication, but by the following Monday Mr L was in touch to ask for a reason for a delay in the transfer of funds.
It was at this point the firm discovered that the email asking for account details to be changed had been sent from Mr L’s address, but that the email account had been compromised.
The matter was immediately reported to the police, the bank and the firm’s insurers, with the police confirming funds had been transferred to a company with no connection to Mr and Mrs L.
The firm recovered around £271,000 in March 2015 and £14,000 in May 2015, but it was not until November 2015 that the firm’s insurers replaced the remaining £48,500.
The firm admitted breaches of accounts rules and failing to report the matter to the SRA. In mitigation, the firm stressed it had made no financial gain from the misconduct and had co-operated with the SRA following the start of its enquiries.
The firm has also reviewed its procedures and brought in third parties to provide training to staff and assess the security of its IT systems.
The SRA opted to rebuke the firm and order it to pay costs of £1,350, adding that this outcome was considered ‘proportionate and in the public interest’ and ‘recognises the loss and inconvenience to Mr and Mrs L caused by the conduct of the firm’.