Legal News

Government Acts to Close Dubious Investment Companies

An essential role of government is to ensure that companies do not operate against the public interest and tight regulatory regimes exist to prevent this, particularly where investments are concerned as the opportunity for fraud is very clear. The fact that such regulation has teeth is borne out by a recent case in which the High Court compulsorily wound up two companies that had mis-sold objectionable investments to the public.

The companies were alleged to have used misleading marketing material to sell investments in carbon credits, rare earth metals, coloured diamonds and precious metals to the general public. They were also said to have charged excessive commissions and, in the circumstances, the then Secretary of State for Business, Innovation and Skills petitioned the Court under the Insolvency Act 1986.

The companies denied that they lacked commercial probity and argued that they had cooperated with the investigation in a transparent and forthright manner. They had ceased trading in coloured diamonds, carbon credits and rare earth metals when they became aware that such products were unsuitable as retail investments.

In upholding the petition, however, the Court found that investors had been seriously misled and that the companies' practices had fallen below the accepted minimum standard of commercial behaviour. Precious metals, in particular, had been mis-sold in a manner that could only have been deliberate. The companies were in any event insolvent and allowing them to continue to trade would expose members of the public to the risk of suffering further loss.

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    If you have suffered financial loss as a result of being misled about the suitability of an investment or the degree of risk involved, contact us for advice. Also, if you receive unsolicited approaches offering above-average investment returns, be extremely wary. Only take investment advice from a reputable source that is authorised by a recognised UK body.

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    The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.