Clients of Vector Wealth have been warned by the Financial Conduct Authority to be on the lookout for scammers after the company became insolvent.
An administration application was made to the High Court of Justice on 11 April by the director of Vector Wealth, with joint administrators James Snowdon and Michael Sanders of MHA MacIntyre Hudson appointed on 22 April.
It comes two months after the FCA imposed a number of requirements on the firm; which included stopping all regulated activity, stopping all unregulated activity relating to mini-bonds, and not to diminish any of the firm’s assets without prior consent from the FCA.
Unlikely to get compensation
Vector Wealth was authorised by the FCA and issued a mini-bond to investors called the ‘Absolute Return Forex Bond’. The proceeds were to be used to generate returns for investors through trading foreign exchange.
The FCA believes roughly 40 customers invested approximately £4m ($5.1m, €4.75m) in the bonds. Vector Wealth has told the watchdog that they were high net worth individuals or self-certified sophisticated investors.
Bondholders have been advised by the FCA that the administrators are assessing the firm’s assets and they will be contacted “usually within eight weeks of being appointed”.
Despite Vector Wealth being a regulated firm, issuing mini-bonds is not a regulated activity. This means that it is unlikely the Financial Services Compensation Scheme will be able to pay compensation “based purely on Vector Wealth’s failure to repay the mini-bonds”.
The FCA added: “If you are approached by a company, including a claims management company, offering to help you recover your money, you should proceed with caution.
“For the vast majority of Vector Wealth’s bondholders, there will be little or no benefit in involving a third party in making a claim.”
