The Court of Appeal has dismissed an appeal by the directors of a land banking firm and ruled that they are in fact running an illegal land bank as a collective investment scheme without authorisation, handing a significant victory to the Financial Conduct Authority.
The Court of Appeal has dismissed on all counts an appeal by David Banner-Eve and Asset Land LI, directors of the land banking firm. Mr Banner-Eve and his associates sold plots of land as investments in Stansted, Harrogate, Lutterworth, Newbury, Liphook and South Godstone.
In February 2013, the regulator won a victory in the High Court, with the judge ruling Asset Land ran an illegal land bank. Mr Banner Eve appealed this, arguing they were not running a collective investment scheme.
The FCA said the Court of Appeal judgment makes clear that the law around CISs, which require regulatory authorisation, does apply to these types of scheme and that any effort to avoid authorisation on technical legal points will be “unlikely to succeed”.
As the scheme was not regulated, the investors had no recourse to the Financial Services Compensation Scheme.
The FCA said it is aiming to return as much as money possible to investors, but it is “unlikely to be the full amount they invested” as the regulator has not identified any assets of the defendants that would enable more than a small proportion of payments to be made.
The High Court made an order in March 2013 that Mr Banner-Eve, Stuart Cohen, Asset Land investments plc and Asset LI Inc make a preliminary payment to the FCA of £21m as part repayment for investors.
The FCA said the payment will remain stayed pending the outcome of any appeal to the Supreme Court.
Tracey McDermott, director of enforcement and financial crime at the FCA, said: “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.
“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.”
