Have You Checked Your Investment Adviser’s Credentials?
Investment advice is best obtained from authorised professionals and it is unwise to rely on friends’ recommendations, no matter how trustworthy they may appear. In one case that proved the point, a currency trader who turned to fraud and lost £500,000 of private investors’ money received a six-year prison sentence.
The man had set up a legitimate business through which he traded on international currency exchanges on his own account. However, a series of reckless deals led to financial problems and he began to invest money on behalf of 28 individuals, some of whom were his close friends.
He only invested about £220,000 of £600,000 that he received, using most of the money to fund a luxury lifestyle, including first class flights and the purchase of a beach villa in Thailand. All but about £100,000 of the sums invested was lost and his victims, some of whom suffered great hardship, were left harbouring intense feelings of betrayal as well as their financial losses.
The currency trader had never been authorised by the then Financial Services Authority to trade on behalf of others and was ultimately jailed after he pleaded guilty to fraud and communicating an invitation or inducement to engage in investment activity. The facts of the case emerged as the Court of Appeal rejected his appeal against the length of his sentence, finding that it was neither wrong in principle nor manifestly excessive.
Because the trader was not an authorised financial intermediary, there is no protection whatsoever for his investors, who must seek redress (if there are assets against which to claim) through the court process. […]