Sesame is investigating one of its appointed representatives who recommended two clients invest pension fund money into a property investment in Cape Verde, which were being managed by a firm that is now the subject of investigations by the police, the regulator and the Fraud Office.
The investigation follows complaints from the clients’ new IFA, Julian Pruggmayer of Financial Risk Management.
A spokesperson for Sesame said: “We operate to the highest regulatory standards and we are now conducting a thorough investigation into this matter. As this case is ongoing it would not be appropriate to comment further at this stage.”
Mr Pruggmayer told FTAdviser that an AR of Sesame converted two of his clients’ funds into self invested personal pensions and then invested a total of £54,000 into a holiday complex called Paradise Beach in Cape Verde being marketed by Arck LLP.
Two senior members of Arck have been arrested by Nottinghamshire Police over allegations of fraud. Today (26 March), the FSA issued a supervisory notice on one of the Sipp operators, HD Administrators.
Regulatory Legal, which is representing over 100 investors and advisers in relation to Arck, told FTAdviser that this part of a £60m fraud.
Sipp provider Greyfriars Asset Management previously told FTAdviser that it has sent out a warning letter to its self-invested personal pension clients and spoke to IFAs who recommended certain investments by Arck.
Mr Pruggmayer took the case to Sesame as the IFA was an AR. Following this he took the case to the FSA highlighting that the investments were unregulated.
He said: “He put these two clients’ funds in to self invested personal pensions. Why? This holiday complex has not been completed and could be part of a wider fraud scam. That aside, this is a very risky investment. Will it get finished? What about currency movements?
“I sent the IFA a letter informing him of all of this but he has not contacted me. As this is an unregulated scheme, it is not protected by the Financial Ombudsman Scheme nor the Financial Services Compensation Scheme.”
The FSA has now issued a supervisory notice to Sipp provider HD Administrators, in which it states that the two approved persons, Kathryn Clark and Michelle King, “do not appear to be fit and proper”.
Mrs Clark was arrested by Nottinghamshire Police on 2 March 2012 on suspicision of fraud by false representation and money laundering in relation to Arck LLP. The other managing member, Richard Clay, was also arrested.
The FSA also said that Mrs Clark appears to have received, circulated or been involved in the provision of forged bank statements purporting to relate to the Arck General Client account at Yorkshire Bank to Arck investors.
In addition, Ms King could not adequately explain to the FSA how a Sipp operated and “did not understand her regulatory responsibilites”, the FSA said.
In response to enquiries made of Arck by investors as to the funds it held, Mr Clay sent an email dated 29 July 2011 to an IFA acting on behalf of investors attaching a bank statement purportedly showing the balance of the Arck General Client account at Yorkshire Bank to be £12,269,425 as at 1 July 2011.
In fact, at this date the real balance was £25.87, according to the FSA.
The IFA involved declined to comment, as did the Serious Fraud Office which is currently investigating the alleged £60m fraud.
