Scheme owners to appeal FCA High Court Ucis decision

Capital Alternatives and African Land will appeal the High Court decision which sided with the Financial Conduct Authority and found that two investment schemes were collectives and could not be lawfully operated by the firms.

When the decision emerged earlier today (17 February), the FCA said the defendants could be ordered to pay compensation which could be passed on to investors.

However, at least two firms have responded that they will fight the decision with an appeal. There are 16 defendants named on the judgement.

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The firms criticised the FCA’s methods and the quality of its evidence.

Capital Alternatives said in a statement: “The FCA only won this preliminary issue trial on the basis of a narrow legal interpretation of the Financial Services and Markets Act. The FCA lost on every significant issue of fact.”

In the court judgement, Judge Nicholas Strauss QC rejected several points of evidence put forward by the FCA, deeming one particular point a “logical non sequitur”.

The company said a hearing in the Court of Appeal will likely take place later this year, and even predicted that the Judge, Mr Nicholas Strauss QC, is set to compensate the defendants in how he allocates costs “for the unfortunate way in which the FCA conducted both the case and the prior investigation”.

African Land said in a statement on its website: “At the outset, it is worth noting that the landscape of the FCA’s complaints... has changed considerably since the FCA launched these proceedings without ever having been to the farm [customers invested in].

“At the July hearing, the FCA’s case against African Land was, in effect, presented as a fraud case where the farm and its operation was a mirage. It was alleged that the scheme was not being operated in accordance with the way in which it was marketed to investors (ie separate harvesting of investor plots) and the underlying implication and tone of the FCA’s case was that the scheme was a sham.”

According to African Land, the FCA made three accusations: that the individual investor acres were not separated; that the individual investment returns were pooled; and that the investment was managed as a whole.

Only the third point stood up under the scrutiny of the High Court and led to the farm technically being classed a collective investment scheme.