FCA wins case against Capital Alternatives and others

Written by Oliver Wade

The High Court has found that Capital Alternatives, Renwick Haddow, Marcia Hargous and Robert McKendrick and others should pay a total of £16.9m in compensation for their roles in four unauthorised collective investment schemes (CIS’s), which were unlawfully promoted to the public.

The schemes involved African land, offering investments in rice farms in Sierra Leone and reforestation projects which gave investors the opportunity to invest in carbon credits intended to be generated from land in Sierra Leone, Brazil and Africa.

The decision has come following prolonged proceedings, an appeal and trial which took place over 22 days, eventually concluding in October 2017.

Victims of the scheme were encouraged to invest in rice farms in Sierra Leone and carbon credits to be generated from land between 2009 and 2013, with the FCA taking legal action in July 2013 in respect of the operation and promotion of a further four schemes. The grounds on which the legal action was taken was the misleading statements made to consumers that were involved in the schemes.

Due to the complexity of the CIS’s, only authorised firms and individuals can operate them. This regulation is in place to protect consumers’ interests if a scheme does not go according to place. None of the defendants involved in the proceedings had received or been given, authorisation to undertake regulated activities.

FCA enforcement and market oversight division executive director Mark Steward said: “This judgment should send a clear message to all of those who use corporate facades to sell dubious investments. We will do what it takes to hold them to account for their misconduct.

“We are acutely aware from experience that the risk to investors who deal with unauthorised firms is that most, if not all, investors are likely only to get a fraction of their money back.

“Consumers should recognise that there are huge risks involved when investing with unauthorised businesses.”

The FCA recommends that consumers only deal with financial firms that are authorised by them in order to stay protected, which they can do by checking the Financial Services Register.

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