FCA wins £16.9m judgement against African CIS

The UK’s financial regulator has warned unauthorised purveyors of ‘dubious investments’ that there is no hiding place as it won its latest judgement – worth £16.9m – against a company and individuals involved in an African, Australian and Brazilian-based collective investment scheme (CIS).

In a judgment handed down yesterday, the UK’s High Court found that Capital Alternatives Limited, Renwick Haddow, Marcia Hargous, Robert McKendrick and others should pay a total of £16.9m in restitution for their roles in four unauthorised CIS’s which were unlawfully promoted to the public by what the FCA called “false, misleading and deceptive” statements.

In summary, the schemes involved:

  • African Land (also known as Agri Capital) which offered investments in rice farm harvests in Sierra Leone, run by African Land Limited; and
  • Reforestation Projects (also known as Capital Carbon Credits) which offered investments in carbon credits intended to be generated from land in Sierra Leone, Brazil and Australia, run by Reforestation Projects Limited.

Yesterday’s decision comes following protracted proceedings, an appeal and an eventual trial which took place over 22 days and concluded in October 2017.

‘Dubious investments’

Mark Steward, pictured left, executive director at FCA’s Enforcement and Market Oversight Division, said: “This judgment should send a clear message to all of those who use corporate facades to sell dubious investments. We will do what it takes to hold them to account for their misconduct.

“We are acutely aware from experience that the risk to investors who deal with unauthorised firms is that most, if not all, investors are likely only to get a fraction of their money back.
“Consumers should recognise that there are huge risks involved when investing with unauthorised businesses.”

Between 2009 and 2013, consumers were persuaded to invest in rice farm harvests in Sierra Leone and in carbon credits intended to be generated from land in Sierra Leone, Brazil and Australia.

The FCA launched legal action in July 2013 in respect of the operation and promotion of the four schemes and also in respect of the false and misleading statements made to consumers by individuals involved with the schemes.

The FCA added that as collective investment schemes can be a risky investment, only authorised firms and individuals can operate them.

“This is to protect consumers’ interests if a scheme goes wrong,” the Uk regulator said.

“None of the defendants in these proceedings were authorised to undertake regulated activities.”

ABOUT THE AUTHOR
Gary Robinson
Head of Video and Ezines at Open Door Media Publishing. Deputy Editor, International Investment. An experienced journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as a fully qualified IFA, Gary works across both International Investment and InvestmentEurope titles. Previous video production credits include projects on BBC, C4 and SKY.

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