A firm offering binary options trading has been wound up in the public interest, following an investigation by the Insolvency Service. Binary options trading is a form of online gambling based on movements in the financial markets. Those purchasing a binary option receive fixed odds on either receiving a specific monetary amount, or will loose all of their investment. The insolvency service appears to have shifted its focus to ‘misleading and false investments’. Including this example, there have been a number of companies wound up in the public interest and directors disqualified for these practices.

Fake investment scheme

Eclipse Finance traded from virtual offices in London and employed high pressure sales tactics to have investors pay into their schemes. Eclipse would exaggerate the potential returns which could be made on investments in order to lure investors in. Once details had been provided, the company would take investors’ money without their permission and carry out trades to which they had not consented to, rather than investing in the fixed odds binary options.

The actions of Eclipse were brought to light when a number of investors reported the issues to Action Fraud. Each of them had lost on average £50,000 and a combined total in excess of £600,000. In some instances investors’ accounts were simply drained of funds with no explanation and they were then unable to contact the firm. The company claimed their systems were hacked on two separate occasions resulting in the losses, however no evidence of this could be provided.

Following the public interest winding up, the Official Receiver will carry out a detailed investigation into the directors of the company and find where the investors’ money has gone. If found culpable, action may be taken against the director to recover funds for the investors and directors’ disqualifications are also likely.

Mismanagement of Pension Funds

The directors of Gleeson Bessent Trustees have received combined disqualifications totalling 21 years for the mismanagement of pension funds invested with them. This follows the business being wound up in the public interest in March of 2017. The investigation follows complaints to the pensions regulator that the funds were exposed to levels of risk higher than permissible for pension funds, effectively gambling with these monies.

Following the investigation all 4 directors accepted disqualification undertakings lasting between 9 and 3 and a half years for the following conduct issues:

  • Failure to comply with pension legislation.
  • Failure to comply with the pensions regulator’s guidance.
  • Operating in a non-transparent way.
  • Transferring pension funds into high risk investments.
  • Misleading layman investors

Abuse of investor’s savings

Another pension company based in Kent, Chartwell Trustee Pension Solutions, has been wound up in the public interest for abusing the trust of investors. Another case demonstrating a close collaboration with Action Fraud, demonstrates another instance of investors money not being used as described. Members were advised that their monies would be invested in storage products, however to date it is unclear where these funds have actually been sent.

Consistent with the other matters above the investments have been made through pressure sales and cold calling, returns have been exaggerated and following the issues customers experienced difficulties in contacting the firm. Approximately £4.8 million has been invested with the firm, and it is currently unclear what proportion on this has been effected, however it is clear that the amount is significant enough to justify a public interest winding up. It should also be noted that the Director of this company had a previous company wound up in the public interest in 2015 for mismanagement of investment funds.

Advice for Investors

There is a clear pattern of actions taken by the insolvency service in an attempt to protect the public from rogue investment companies, however the damage is often already done by the time action is taken. When considering investments some simple steps can give you a better idea on the security of your investments:

  • Do not sign up immediately from cold callers.
  • Look into the owners of the business and any historic failures at companies house.
  • Obtain clarity on exactly where your monies are being invested.
  • A lack of contact is a major warning sign that something is wrong.
  • Take independent advice.

If you are concerned about the security of your investments and any of the above signs sound familiar you should take action to protect your position. Companies can be wound up in the public interest by the insolvency service, or you can take a more proactive approach to wind up the company yourself and appoint a liquidator to investigate the actions of the company directors. Robson Scott Associates carry out numerous investigations into the conduct of directors year on year to ensure the best results for creditors.