Two directors who lied to hundreds of shareholders in a bid to raise millions as part of an unauthorised share scheme have been banned by the Insolvency Service for a total of 17 years.
Retail investors lost £3.6m after investing in Our Price Records, a marketing company run by directors Lee Skinner and Karen Ferreira who lied to prospective shareholders in order to secure funds.
In May the Financial Conduct Authority secured a restitution order against the pair at the High Court after it found the funds were raised from members of the public using "misleading" and "unlawful" promotions.
Mr Skinner and Ms Ferreira have now been banned by the Insolvency Service for 10 and seven years respectively.
Robert Clarke, chief investigator at the Insolvency Service, said: "Using an agent, Karen Ferreira and Lee Skinner made false and misleading promises to prospective investors when they were trying to entice them to invest into Our Price Records.
"Not only did this breach financial regulations but investors were totally unaware of other agreements Our Price Records made, which saw millions of pounds being handed over to third parties."
Mr Clarke said investors had suffered "significant financial losses".
He added: "However, these bans should serve as a warning to other directors tempted to raise funds by illegitimate means that we will investigate and remove them from the business environment."
According to regulator and Insolvency Service the two directors used misleading promotional material to dupe shareholders into believing their brand was well known, despite having their application to register the name Our Price Records as a trademark opposed by its original owner.
The company then sold shares through a third party but neither had the authority to engage in investment activity, breaching financial regulations.
The pair also failed to tell investors that the company had entered into agreements to pay up to 50 per cent of total funds to the third parties selling the shares - meaning Ms Ferreira and Mr Skinner paid up to £1.58m in commission to third parties.
Earlier this year the FCA 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 regulator a total of £3,619,352 was raised from 259 investors, with individual investments ranging between £1,200 and £252,000.
Last week the Insolvency Service said the funds raised by investors remained outstanding in the administration and they were not protected under the Financial Services Compensation Scheme.
rachel.mortimer@ft.com
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