Investments  

Firm that issued mini-bonds enters administration

Firm that issued mini-bonds enters administration
 

Investment firm Vector Wealth has entered into administration and is currently being investigated by the Financial Services Compensation Scheme on the investment services it provided.

Vector Wealth Ltd is a firm authorised by the Financial Conduct Authority that issued a mini-bond to investors called the 'absolute return forex bond'. 

According to an update by the FCA, the marketing material for this mini-bond stated that the proceeds of the mini-bond would be used to generate returns for investors through trading foreign exchange.

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Vector Wealth told the FCA that all purchasers of the mini-bond were either high net worth or self-certified sophisticated investors. 

The FCA believes that there are approximately 40 customers who have invested in Vector Wealth bonds, totalling approximately £4mn. 

The director of Vector Wealth made an application to the High Court of Justice on April 11 to seek an order that the company be placed into administration. 

Last week (April 22), James Alexander Snowdon and Michael Colin John Sanders, both of MHA MacIntyre Hudson, were appointed as joint administrators of Vector Wealth.

This came after the FCA imposed a number of requirements against Vector Wealth in February which included asset restriction and the ceasing of all regulated activity.

However although Vector Wealth was regulated, the FCA said it was only authorised to conduct some investment related activity. 

“The issuing of Vector Wealth’s mini-bond was not a regulated activity,” it said. “This means that FSCS protection may not apply.”

The FSCS said it is unlikely to be able to pay compensation based purely on Vector Wealth’s failure to repay the bonds, as issuing bonds is not normally a regulated activity.  

FSCS is investigating if there are investment services provided by Vector Wealth in relation to these investments that are regulated and meet the qualifying conditions for compensation. 

The FCA set out the steps Vector Wealth customers can take and advice on how to protect against scams by fraudsters claiming to act on behalf of the administrators.

The FCA said the administrators will be writing to customers of Vector Wealth on what this means and the action they should take. 

“If you do not receive a letter from the administrators by Friday 29 April 2022, you should contact them,” it said. 

“We understand that the administrators are planning to phone investors to explain what is happening over the week commencing April 25, 2022. If you are contacted by the Administrators, please end the call and phone back using the details below to confirm the legitimacy of the call before continuing the conversation.”

sonia.rach@ft.com

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