Regulation  

Gov’t urges public to be wary of investment cold calls

Insolvency Service urges the public to not respond to cold calling investment “sharks”, following the winding-up of two companies that sold rare earth elements as investments to the public and two carbon credit companies who were ordered into liquidation in the High Court.

The separate cases have been publicised by the government to show the potential for investor detriment from such companies.

Chris Mayhew, company investigations supervisor at the Insolvency Service, stated: “I would once more urge investors not to respond to cold calling investment sharks as you stand to gain nothing and risk losing everything.”

At the end of August winding-up orders were handed down to Swiss registered Denver Trading AG, and Seychelles registered Denver Trading Ltd, following an investigation by the Insolvency Service.

They acted as suppliers of rare earth elements – metals increasingly used in electronics manufacturing – to members of the public through a network of over 40 UK based sales agents, who were typically paid 40-50 per cent commissions for each sale.

The investigation found sales agents made “serious misrepresentations” as to investment returns, while the Denver Trading AG website included false and misleading statements as to the standing and expertise of that company.

David Hill, a chief investigator with the Insolvency Service, said: “Investors need to be wary: if you are cold-called and pressured to invest in any kind of investment, just hang up; no genuine investments would be in such a manner.”

Registrar Barber in the Companies Court found that the companies were structured to mask the identity of those who exerted control and management, which were in fact Christopher John Sabin and Tobias Alexander Ridpath, although neither had ever been appointed as directors.

According to Mr Ridpath and Mr Sabin, the Denver Trading companies had generated turnover of around £6m over approximately 15 months starting in early 2012. The companies are subject to an on-going criminal investigation by Devon and Cornwall police.

Meanwhile, Carbon Green Capital LLP and Agora Capital Ltd were liquidated in the public interest on 22 October, following petitions presented by the secretary of state for business, innovation and skills.

Another Insolvency Service investigation found the firms had sold carbon credits to members of the public as investments by making false and misleading claims as to the likely investment returns. A carbon credit is a certificate or permit which represents the right to emit one tonne of carbon dioxide (CO2) and can be traded for money.

Agora Capital received in excess of £274,000 from members of the public. It then continued Carbon Green Capital’s business from the same offices and using some of the same materials, raising a further £580,000.

The limited liability partnership set up by Steven Sulley and Christopher Chapman claimed to be ‘dedicated to helping its clients’ and to take pride in its ‘professional, transparent and ethical service’, asserting that carbon credit prices were set to triple by 2015.

peter.walker@ft.com