A defunct law firm has been fined nearly £1m for its involvement in overseas share scams that defrauded British investors out of millions, in a sweeping victory for the City’s much criticised financial regulator.

Former partners at Fox Hayes, a Leeds-based law firm that went into administration last month, will have to pay the penalty out of their own pockets after Tuesday’s Court of Appeal ruling that the firm “recklessly’’ failed to ensure that the schemes it approved were fair and clear. In total, 670 investors lost about $21m, buying high-risk, illiquid shares of tiny companies not quoted in the UK.