Fraudulent investments?

Reaper

M.Elliott wrote: »

So I'm being naive here but can anyone really set up a business, take people's money, invest it in high risk places and then if it all goes belly up just walk away without any explanation to anyone or any fall back?

Pretty much. Let's imagine I look round the internet today and find a foreign company "X" offering a huge 20% commission if money is invested with them. I set myself up as a middle man, persuade UK investors to invest with my UK firm and pass all the money on X and take my cut.

I'm not too surprised it goes belly up but what the heck it's not my money. I close my firm and move on. Investors might try to stop my company liquidating itself but I have no assets anyway having taken the proceeds out as salary.

I can't say that's what has happened here but that sort of thing is possible. The only issue is I am not allowed to promote my unregulated firm directly to investors in the UK but there are ways of skirting round that.

The moral is don't use unregulated companies and/or go through an IFA for a degree of protection.

Malthusian

M.Elliott wrote: »

So I'm being naive here but can anyone really set up a business, take people's money, invest it in high risk places and then if it all goes belly up just walk away without any explanation to anyone or any fall back? Seems ridiculous.

There is no developed capitalist country where it is illegal to solicit investment. No law exists to stop me asking my parents or my mate down the pub to loan me £1,000 to buy a van to set up a window cleaning business. The law only starts to take an interest when I solicit investment from the general public. If instead of asking my parents for £1,000 I put adverts in the general press asking the public to invest £2 million so I can day-trade shares, now I'm breaking the law (FSMA 2000).

Between these two extremes, there exists a grey area - as with any law. In this grey area it is possible to raise significant amounts of money from investors without breaking the FSMA's prohibitions against soliciting investment from the general public. Or at least not breaking it blatantly enough to trigger an immediate investigation by the FCA. Companies like Munio, Privilege, and numerous other still-operating companies which I will not name here existed in this grey area.

They're the investment equivalent of legal highs.

Hope this thread highlights risks to people who might not have known otherwise and prevents other people from losing out and also makes people question what their financial advisor is doing with their money and is it right for them ��

What's the status of the complaint to your parents' financial adviser? I believe you complained in May so the adviser's eight weeks to reply should have expired weeks ago, and you should have gone to the Ombudsman if you haven't had suitable redress.

This is the important thing. The doings of Munio, Helix and Privilege are basically irrelevant to you. To be frank, the only reason we have spent the last two pages talking about Privilege and payday loans to the Sioux Indians is because we are rubbernecking. The complaint to your adviser is by far and away your parents' best hope of recovering any funds.

M.Elliott

Interesting Reaper and Malthusian, gives some insight to try and make sense of this whole thing. Unbelievable it's so easy to essentially rip people off get away with it. Without being in that situation it's hard to understand the implications and effects that ultimately it can have on people's lives. It can be devastating.
Malthusian, the letter of compliant was given and very soon after my parents and the FA came to a private agreement so didn't get as far as the ombudsman which I think is quite unfortunate.

Reaper

I'm pleased to hear redress was made by the IFA to your parents satisfaction.

Sadly Graham Vodden's prospects do not look so good having invested directly.

Graham_Vodden

Thanks Reaper and all of you for your input. In regard the insurance cover, I have just checked the memorandum again and there is no mention of a name of any insurance company. Seems this was a sprat to catch the mackerel.

vac2018

I want to invest as I got a great job in Ajman UAE. Hopefully I will save a decent amount.

Malthusian

Graham_Vodden wrote: »

Thanks Reaper and all of you for your input. In regard the insurance cover, I have just checked the memorandum again and there is no mention of a name of any insurance company.

Even if there was insurance it wouldn't apply to Munio's failure to repay your money. No insurer provides credit default swaps for unregulated investment schemes.

A common feature among a number of unregulated investment schemes is to prominently promote the fact that the company has professional indemnity insurance or a similar type of common-or-garden commercial insurance, and leave investors to draw the erroneous conclusion that the insurer will pay out if the scheme runs out of money, making it risk-free.

It's equivalent to me asking to borrow £10,000 off you and claiming there's no risk because I've got home insurance. "But home insurers don't pay out if the owner can't pay their debts" you say. Correct. Same applies here.

(Or to be strictly accurate, saying "Can I borrow £10,000? I'm insured by an A-rated insurer." The second sentence is an irrelevant non-sequitur. If you later say "You told me it was risk-free because you were insured", I say "I said no such thing, I only said that I was insured which was true. If you got it into your head that it was risk-free, that's not my problem. And you should have read the extensive list of risk factors on page 4 of the information memorandum which clearly stated that capital was at risk".)

SeaPrince1

Hi, I'm in a similar situation regarding Munio. Has there been any change or developments in their circumstances that anyone is aware of? I saw on another site that the Director themselves have applied, early in October, to have the company struck off.
My IFA recommended that I invest a portion of my retirement funds in Munio because of the insurance policy which was to cover 95% of losses.

M.Elliott

https://bondreview.co.uk/2018/10/06/munio-capital-directors-apply-to-dissolve-the-company/amp/

Yes they have applied to have it struck off, presumably because they know there is no money to be got back and they want to wash their hands of the whole sorry mess. The above link is enlightening and might help you. You wont be getting any money back from Munio but you may be able to get money back by complaining to your IFA if you believe you weren't suitable for this investment, i.e are you a 'high risk, sophiscated invester'. Good luck SeaPrince1, hope you manage to recover some of your loses.

Malthusian

SeaPrince1 wrote: »

My IFA recommended that I invest a portion of my retirement funds in Munio because of the insurance policy which was to cover 95% of losses.

Your IFA was lying to you as they knew (or reasonably should have known, which is the same thing) that the insurance company would not cover the risk of default. No insurer offers credit default swaps for unregulated investment schemes.

As M Elliott and the linked article have said, make a formal complaint that the investments were unsuitable for you, and then follow through with the Financial Ombudsman and the Financial Services Compensation Scheme if necessary. You are one of the lucky ones (relative to other Munio Capital investors); users of regulated financial services will cover your losses to some extent.