The Financial Conduct Authority (FCA) has warned unauthorised providers of collective investment schemes 'we will come after you' after the UK's Court of Appeal upheld a rosecution against a firm selling land as an investment.
David Banner-Eve and associates were found guilty in February 2013 of running an illegal land bank by operating a collective investment scheme without authorisation from the Financial Services Authority, the FCA’s forerunner.
Banner-Eve and his firm, Asset Land LI, had been selling plots of land as investments including land in Stansted, which is close to London, and Harrogate, an affluent town in the north. Banner-Eve claimed the scheme was not a collective investment scheme. Such schemes have to be authorised by the FCA.
After the appeal court threw out the case, the FCA says the judgment makes it clear that collective investment scheme laws do apply to these types of scheme and any effort to avoid authorisation on technical legal points will be unlikely to succeed.
The case could still be appealed at the Supreme Court.
Tracey McDermott, director of enforcement and financial crime at the FCA, says: “Winning this case sets an important legal precedent in the fight against unauthorised business. Firms trying to exploit loopholes to claim that they are not running collective investment schemes should be clear - it simply will not work.”
She adds: “This is a clear warning to any firm selling dubious investments and I reiterate it today: we will come after you, we will shut you down, and we will do whatever we can to ensure money you have taken, no matter how much - or little - is left, is used to reimburse your victims.”
McDermott says that the FCA constantly sees new variations on these schemes.
The High Court previously ordered Banner-Eve, Stuart Cohen, Asset Land Investments plc and Asset LI Inc to make a preliminary payment to the FCA of £21 million (€25 million) as part repayment for investors.
The FCA is aiming to return as much as money possible to investors, but says it is unlikely to be the full amount they invested. The FCA has not identified any assets of the defendants that would enable more than a small proportion of these payments to be made.
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