UK regulator the Financial Conduct Authority (FCA) went to the High Court in London to obtain an injunction that prevents unidentified persons from continuing with an unauthorised Cyprus-based investment scheme based on foreign exchange, the FCA said.
At least 65 investors put £1.2m into the scheme, the FCA said, but none of the investors’ money was ever used in foreign exchange trading.
Nor was it used it “any other type of investment”, said the FCA, raising fears that the scheme might prove to have been a scam.
The judge in this case, Christopher Pymont QC (sitting as a deputy judge of the High Court), said that Noerus Investments Limited, which is an unauthorised company based in Cyprus, and individuals carrying on business under the name Noerus Capital, “unlawfully promoted, and purported to operate, a managed foreign exchange trading facility” between December 2014 and November 2015.
This activity, said the judge, was carried out in contravention of the Financial Services and Markets Act 2000.
The court also issued injunctions to prevent the company and individuals attempting to carry on with their business, which would mean further contraventions of the act.
Court ordered compensation for investors
The court made a restitution order that means the defendants must pay £1,230,298.41 to cover the loss suffered by the investors.
“Given the FCA has not yet identified sufficient assets to cover the full amount of losses to investors,” the regulator said, “it is likely there will be a shortfall in the amount that investors can recover.”
To assist in the distribution of funds, said the FCA, the court approved a scheme by which the FCA can return all sums recovered.
The Court also continued a freezing injunction against Noerus Investments Limited to help identify and seize assets or funds to be used to compensate victims of the scheme.
The FCA originally commenced civil proceedings not just against those who promoted and operated the scheme, but also against other unauthorised parties whose actions facilitated it.
The FCA also said that it had previously reached a settlement with some of the defendants.
FCA director of enforcement and market oversightMark Steward said that the FCA would continue to use its powers “to strike down firms” carrying on unauthorised regulated activities without FCA approval, to recover losses caused by misconduct and “to hold accountable all those involved, including facilitators”.