The FSA said it hoped the fine would be a warning to other firms
Glasgow-based stock broking firm Direct Sharedeal Limited (DSL) has been fined £101,500 by the Financial Services Authority (FSA).
The fine was imposed after an appointed representative used misleading sales pitches which failed to set out the risks of buying penny shares.
The FSA said First Colonial Investments (FCI) also put customers' money at risk by holding it in an unregulated firm.
DSL specialises in spread betting and share dealing.
Margaret Cole, director of enforcement at the FSA, said: "It is totally unacceptable for customers to be given misleading information, particularly when it relates to the risks of investing in penny shares.
"This applies whether that misleading information is given by an FSA authorised firm or by its appointed representatives.
"The small cap stock broking sector has been under increased vigilance by the FSA because of a need to drive up standards of customer treatment in this sector.
"This fine should serve as a warning to firms with similar business models that they need to be vigilant about what is going on at their appointed representatives - the responsibility lies with the authorised firm."
The FSA said DSL had agreed to pay the fine at an early stage of its investigation.
Had this not been the case, the FSA said the financial penalty would have been £145,000.
DSL has also agreed to contact FCI's clients and provide redress where appropriate.
DSL has voluntarily varied its regulatory permissions, meaning that it can no longer take on new appointed representatives.