The Financial Services Authority is warning consumers to steer clear of investment schemes offering u...
The warning follows the regulator's announcement that it has obtained a High Court judgment against Michael Dinmore from NCI International Limited and Roelof Hofman of D&R Consulting Group Limited for contraventions of the Financial Services Act 1986.
According to the ruling, Dinmore introduced nine UK investors in October 1999 to three "programs" operating in the US, promoting them on the basis it could return in excess of 75% per annum "with no risk to clients' money".
Investors were duped into handing over US$650,000 for the scheme and told the funds would be held at a reputable US bank in an account over which the investor had sole control.
The judge, Mr Justice McCombe, ruled in favour of the FSA and went on to say:
"I am firmly of the view that although it purported to be an investment scheme of some sort, it was nothing more than a sham designed to defraud the badly advised, the ignorant and the greedy of their money."
The FSA aims to use this case as an example and warn investors to be cautious about investments when marketing literature suggests:
Unrealistic rates of return, in this case from 75% to 400% per month, with no risk to client funds;
References to High Yield Investment Programmes, 'Blocked' or 'Reserved' Funds Programmes and Bank Debenture Trading Programmes;
Supposed involvement of "top AAA-rated banks" lending funds to "the IMF and the World Bank";
Schemes involve highly leveraged trading involving tens or even hundreds of millions of dollars;
Unnecessary complexity in documentation and confusing explanations which obscure the true nature of the transaction;
Assurances that investors' money can generate a huge profit even though it stays in a designated bank account and never leaves the client's control.
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