A UK-based start-up company has been ordered by the high court to reimburse its investors, following an investigation by the Financial Conduct Authority (FCA).
Our Price Records (OPR) promoted other companies’ products through its website for 50% commission.
But after failing to secure investments from high net worth and sophisticated investors through a firm regulated by the FCA, it turned to retail customers to try and raise funds via two share offerings.
The first one took place between October 2014 and March 2015 at £0.60 per share, and the second one from March 2015 to November 2015 for £1 per share.
The start-up promoted those products through unauthorised marketing agents, which managed to raise £3.6m ($4.4m, €4.1m) from 259 investors, with individual contributions ranging between £1,200 and £252,000.
A web of disguises
The high court said that OPR’s directors, Lee Skinner and Karen Ferreira, should pay back £3.6m and £2.79m, respectively, in restitution for the “unlawful promotion of OPR shares to the public”.
It also found that Skinner knew the marketing was false or misleading and that he concealed information in the firm’s promotional material.
The marketing agents were Clive Mongelard (aka Clive Harris), Tyrone Miller and Venor Associates Ltd, who operated under the name Gemini. They will jointly need to give back £1.2m for their roles in the unauthorised scheme.
However, the FCA is only permitted to recover the sum that was initially lost by the investors; namely the £3.62m
It is unclear at this stage what will happen with the remaining roughly £4m – should the individuals and companies manage to repay all that was mandated by the court.
Shell companies
Additionally, the high court found that Venor advised investors on “the merits of acquiring shares in OPR without authorisation and made false or misleading statements to consumers”.
After marketing commissions, most of the funds were funnelled to Skinner through two shell companies, the court added.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Investors should stay clear of any unsolicited investment offers from unauthorised advisers or brokers. These businesses are breaking the law and will almost certainly lead to investment losses.
“The FCA is able to take punitive and remedial action in some cases but the best protection is to avoid these types of offers completely.”
