The Consulting Association has been forced to close after it breached the Data Protection Act.
The Information Commissioners Office (ICO) revealed the company, which collates information of employees of the construction industry, had sold over 3,000 workers personal data, including employment history and trade union activity, to building firms without their consent.
According to the watchdog, the secret system has been running for 15 years, allowing building firms, including Taylor Woodrow and Balfour Beatty, to illegally potential employees. The ICO is also considering action against the firms that purchased the data for The Consulting Association.
The firms paid an annual fee of £3,000 and then £2.20 details on each potential employee, the ICO said.
"Trading people's personal details in this way is unlawful and we are determined to stamp out this type of activity," said deputy information commissioner David Smith.
Smith told the BBC: "The construction companies that were his [The Consulting Association's owner] customers, we have to investigate and find out just what their involvement is. But what we're looking to do there is issue enforcement proceedings against those that were involved and that'll put them essentially on notice that if they get involved in this illegal trade again, then they will face prosecution."
See also: 6m people's data posted online in Chile