Thursday, January 12, 2006

Crooked lawyers ordered to pay up

A SOLICITOR and his law firm must pay £360,000 to 63 investors involved in a boiler room scam the Court of Appeal ruled today.

John Martin and Adrian Sam & Co ("ASC"), the former London-based law firm at which Martin was a partner, were found guilty in December 2004 of being involved in an illegal overseas investment firm's 'boiler room' activities in the UK.
At the time, the judge ruled they should to repay money to investors. Martin and ASC appealed against that ruling. They did not challenge the finding that they were knowingly concerned.
Today, Margaret Cole, director of enforcement at the FSA said Martin and his firm 'were no more than a seemingly respectable front for a boiler room and these investors believed that by paying money to a UK solicitor, their investment was safe.'
The FSA said it will now begin the process of enforcing the payments, including establishing what assets are available. But it added: 'A full recovery of all the victims' losses cannot be guaranteed.'
The case related to a period between August 2000 and October 2001 when Steven Wilkinson, trading as Apex Equities and then as Great British Investors, operated a boiler room in Spain. Wilkinson and the boiler room operated illegally by carrying on investment business in the UK without authorisation.
The boiler room operated by making unsolicited phone calls to UK residents during which Wilkinson and his cronies recommended certain shares that were offered at inflated prices. They claimed the shares were going leap in price; and that the boiler room would only receive payment if the shares they recommended increased in value. Investors paid more than £825,000 directly to ASC's client account. This process was designed to imply to investors that their money was safe in the hands of UK solicitors.
Martin, on behalf of Wilkinson, used the investors' money to acquire the shares for the investors at a price of between £2 and £5 less than the investor had agreed to pay for the shares. Martin also arranged for the delivery of share certificates to the investors. ASC charged Wilkinson £60,500 for its work. The High Court found that Martin knew Wilkinson was acting without authorisation.
At the time the boiler room ceased trading, investors fell into two categories - those who received a share certificate from Martin after paying him money, and those who paid their money but received no share certificate. Following earlier court proceedings, ASC refunded 67p in the pound to those investors who had not received a share certificate.
In December 2004. the High Court ordered that those investors with no certificates should receive the balance of their investment back in full from Martin and ASC and that investors in possession of a share certificate should receive the difference between what they paid per share and what it was actually worth at the time ASC acquired the shares
Today the FSA said in a statement that because the boiler room was not authorised by the FSA, investors do not have access to the Financial Services Ombudsman or the Financial Services Compensation Scheme.
Margaret Cole added: "Investors who do not look into the true nature of the deal they are getting into can suffer substantial harm, as can professionals who act as fronts for boiler room operations. Although the FSA can seek to recover victims' losses through the courts, we can rarely get investors all their money back."

1 Comments:

Anonymous Anonymous said...

UK investors
Really useful blog.Good work keeping this updated! Thanks a lot!
Really useful blog.Good work keeping this updated! Thanks a lot!

1:20 AM  

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