Retail investors who lost £3.6m when they fell victim to an unauthorised share scheme are a step closer to having their money returned.
In a decision handed down today (May 6) a High Court has ordered four individuals and one company to pay back funds raised from members of the public via "misleading" and "unlawful" promotions.
The decision comes as the Financial Conduct Authority renewed its warning against unsolicited investment offers and unauthorised advisers.
An investigation by the regulator found directors of Our Price Records (OPR), a start-up company which promoted the products of companies on its website for a commission, had raised funds from retail customers through two share offerings in 2014 and 2015.
The FCA found the company's directors, Lee Skinner and Karen Ferreira, had initially failed to secure any investment from high-net worth investors through an FCA authorised firm and instead promoted its share offerings through unauthorised marketing agents.
The majority of investors were introduced by several marketing agents operating together under the name Gemini Asset Management, including Venor and Miller & Osbourne Associates, according to the FCA.
The marketing agents telephoned members of the public directly and according to the regulator unlawfully promoted the OPR shares and arranged for investors to buy them without authorisation.
The regulator said the first share offering took place between October 2014 and March 2015 at 60p per share, and the second between March 2015 and November 2015 at £1 a share.
According to the FCA a total of £3,619,352 was raised from 259 investors, with individual investments ranging between £1,200 and £252,000.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: "Investors should stay clear of any unsolicited investment offers from unauthorised advisers or brokers.
"These businesses are breaking the law and will almost certainly lead to investment losses.
"The FCA is able to take punitive and remedial action in some cases but the best protection is to avoid these types of offers completely."
OPR entered administration in April 2017 and Miller & Osbourne Associates Ltd was dissolved in August 2019.
The FCA's investigation found marketing materials used by OPR contained misleading or false statements and did not disclose that marketing agents received around 50 per cent commission on the gross amount raised on any sale of shares.
The regulator said: "[They did not disclose]... that a large part of the remaining funds invested by shareholders was funnelled to Mr Skinner via two shell companies.
"It also did not disclose accurately the status of trademark proceedings that had been brought against OPR.
"Venor included false and misleading statements in the scripts it used during sales calls, including that OPR was a very fast-growing company, that Mr Skinner was a personal friend of Richard Branson and that the band Madness had agreed to appear for free in an advert for OPR."
Subject to any appeals that may follow the High Court's decision today the FCA is expected to recover the funds from the defendants so they may be returned to investors.
The court ordered that Skinner and Ferreira should pay £3.6m and £2.8m respectively in restitution for their roles in the unlawful promotion of OPR shares to the public.
However, the FCA may not recover more than the total investor losses of £3.6m.
rachel.mortimer@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.
