The Financial Conduct Authority has won its case against unregulated introducer Alexandra Associates UK and its directors over the troubled transfer of £92m pension assets, after previous findings were upheld in the Court of Appeal.
The decision opens the way for £11m to be paid out to investors following an earlier restitution order which will now be enforced.
The Court of Appeal has upheld previous findings that the activities of unregulated introducers Avacade Limited and Alexandra Associates, and their directors, were unlawful as they had advised on investments, made unapproved financial promotions and made false or misleading statements.
The previous High Court case found that Avacade, which is in liquidation, Alexandra Associates, and directors Craig Lummis, Lee Lummis and Raymond Fox had arranged and promoted investments without FCA authorisation.
They had also made false and misleading statements to investors which led them to transfer their pensions into self-invested personal pensions and then into alternative investments such as HotPods (office space available for rent), tree plantations and Brazilian property developments.
More than 2,000 consumers transferred about £91.8m from their pensions into the Sipps.
Approximately £68m of that amount was invested in products promoted by Avacade and Alexandra Associates and £905,000 was invested into a fixed rate bond relating to a Brazilian property development.
From these investments Avacade and Alexandra Associates earned commissions in the region of £10.8m but many of the underlying investments have since failed or are in liquidation.
Introducer Alexandra Associates UK and directors Craig Lummis and Lee Lummis were granted permission to appeal their case back in December after Lady Justice Asplin allowed the appeal on two grounds.
One related to the correct interpretation of the law that governs ‘making of arrangements’ and the other concerned the High Court’s interpretation of ‘independent advice’ and ‘introducing’.
Mark Steward, the FCA’s executive director of enforcement and market oversight, said: “The Court of Appeal decision vindicates the original decision and will help vindicate the rights of more than 2,000 investors who have lost pension money through the defendants’ conduct in leading them into these toxic and high risk investments.”
The High Court made an order in August 2020 against the unregulated introducers and the directors to pay a total of £10,715,000 in restitution to their victims.
The Court of Appeal’s decision now opens the way for the order to be enforced by the FCA.
The FCA has urged any Avacade or Alexandra Associates clients who believe they may have lost money to contact them.
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