Dodgy investment by my stepfather, can I claim for him

happyhero

[FONT=&quot]Hi, I would appreciate some advice or guidance.[/FONT]
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[FONT=&quot]My Stepfather has Parkinsons and Dementia has asked me in the past several times, to chase up some investments he feels he was mis-sold. His mental state is not great now but he was a keen investor in the past buying and selling through a well known broker. His attitude to risk was very conservative. He didn’t like wasting money and often bought second hand from charity shops etc. [/FONT]
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[FONT=&quot]He did not like to do anything risky but during the period 2003 to 2011 for some strange reason he was given advice over the phone and went with it. A guy from a broker called CSS regularly phoned him up and encouraged him to buy a stock. He then went ahead and bought this stock through CSS investing thousands of pounds each time i.e. anything from £1000 to £5000 per time.[/FONT]
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[FONT=&quot]The problem with these investments compared to say a normal share like BT or Tesco is that they were not tradeable by any other broker, not listed on the stock market and not sellable in any way I could establish. It’s as if a person made up a company and a quantity of shares and offered them out to people. They seem worthless to me as you cannot do anything with them.[/FONT]
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[FONT=&quot]Possibly they encouraged my stepfather (and I am guessing here) that they would eventually become listed on the stock market and so become tradeable hopefully at a profit if the company flourished, thus making investment sound attractive.[/FONT]
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[FONT=&quot]This sort of buying is totally opposite to my stepfathers character and he was not showing any obvious signs that we could tell back then of his Parkinsons so I am really at a loss to understand why he made these purchases but then I did not hear any of the calls he received as he managed these himself privately as you would expect of him, being a keen investor.[/FONT]
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[FONT=&quot]Now I am going to give it a shot at making a complaint that he was mis sold these investments. Its quite a bit of money at about £50,000 total. [/FONT]
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[FONT=&quot]I do feel a bit guilty as in March 2018 I asked CSS if they could give me my stepfathers purchase history with purchase amounts and after giving them my POA for my stepfather they were very helpful and gave me this and now I am about to use it against them. What they did to my stepfather was not nice at all but I can’t help feeling a bit 2 faced here. The only reason I know it is £50,000 is because they gave me the list. When I tried to figure it out myself I found my stepfather had plenty of paperwork but none of it stated purchase figures, only share quantities. This seemed significant by its absence considering the amount of paperwork and there being 15 or so companies. [/FONT]
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[FONT=&quot]Although they were helpful I’m taking their word at the moment with the list as I feel there may possibly be a few more companies (I’m going to search through his old paperwork to check).[/FONT]
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[FONT=&quot]So what do I say to CSS to challenge them?[/FONT]
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[FONT=&quot]Is there any reason why I can’t challenge them now (I know they changed their name slightly, was this to protect themselves somehow)?[/FONT]
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[FONT=&quot]What do I ask for, all £50k back, £50k plus interest or half or let them suggest figures?[/FONT]
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[FONT=&quot]Am I right in thinking they have 8 weeks to respond and I can then go to the Ombudsman?[/FONT]
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[FONT=&quot]By the way there is a follow on pattern here with these companies which I expect they will all follow eventually. Out of the list of 15 I was given, 8 of the companies have the words Company Dissolved after them.[/FONT]
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[FONT=&quot]Any other advice/help anyone can offer with this matter?[/FONT]

masonic

Do you mean Collins Sarri Statham Investments Limited?

What financial loss has your stepfather incurred as a result of the investments? It would be useful to establish this so that you can ask for an appropriate amount of redress. Any paperwork you can obtain relating to the investments and particularly any assessment of your stepfather's circumstances and the suitability of the investments would be very helpful.

You are right that the first step would be a formal complaint that the investments were unsuitable, and that your stepfather should be put back into the position he would have been in if the investments had not been made. You could then take your complaint to the FOS when you receive a final response or don't resolve the matter within 8 weeks.

Note that the firm made a loss in their last published accounts (and a microscopic net profit the year before). But they are authorised to give investment advice, so your father would have FSCS protection if these investments were made under advice, were found to be unsuitable and the firm could not repay him.

Apodemus

You don’t mention if you have Power of Attorney for you stepfather, which I would imagine might be important in entering into any dialogue with companies or ombudsmen on his behalf.

Rheumatoid

Apodemus wrote: »

You don’t mention if you have Power of Attorney for you stepfather, which I would imagine might be important in entering into any dialogue with companies or ombudsmen on his behalf.

He suggests he does:

"I do feel a bit guilty as in March 2018 I asked CSS if they could give me my stepfathers purchase history with purchase amounts and after giving them my POA for my stepfather they were very helpful"

Apodemus

Rheumatoid wrote: »

He suggests he does:

"I do feel a bit guilty as in March 2018 I asked CSS if they could give me my stepfathers purchase history with purchase amounts and after giving them my POA for my stepfather they were very helpful"

Sorry, missed that!

Aretnap

I do feel a bit guilty as in March 2018 I asked CSS if they could give me my stepfathers purchase history with purchase amounts and after giving them my POA for my stepfather they were very helpful and gave me this and now I am about to use it against them. What they did to my stepfather was not nice at all but I can’t help feeling a bit 2 faced here. The only reason I know it is £50,000 is because they gave me the list.

I don't think you need to feel guilty about that. The record of your stepdad's investments is something he is (or you are, as his POA) entitled to as a matter of course. If you thought a bank had done badly by him, would you feel guilty about using his bank statements to support your complaint? I'm not seeing a great difference between the scenarios.

Unlisted shares would normally be considered at the very upper end of the risk spectrum - suitable only for unusually wealthy investors with unusually high risk tolerance, and even then only suitable as a small proportion of their portfolios. So they don't sound like the sort of thing that a reputable, or even semi-reputable, broker/advisor should be pushing onto their clients. By CSS do you mean these people?

https://www.css-investments.com/legal/independent-advice/

(I note that their website only says that they do stock exchange listed shares, though this may not always have been the case)

Or do you mean someone else, perhaps someone less reputable, perhaps with a name designed to be confusing? (Although if that's the case it's rather surprising if they're still around to speak to at all 10+ years later)

I also don't think it's all that easy to invest a couple of grand in an unlisted company that you'd actually want to own shares in (especially pre-crowdfunder etc) . Genuine start ups tend to be funded by venture capital funds, by very wealthy individuals or by their founders and people with personal connections to them - not by random punters who chip in a thousand quid each. OTOH there are plenty of unlisted companies which are actually borderline (or not so borderline) scams intended mainly to extract money from their shareholders, rather than to be run as a viable business. And those shares do get pushed onto the general public via cold callers and dubious intermediaries. It might help if you named some of the companies he's invested in; someone might be able to look through their accounts and offer an opinion on which category they fall into.

dunstonh

There are some concerns overall but there is very little to go on to so far.

So what do I say to CSS to challenge them?

How and why do you want to challenge them?
You are alleging a wrongdoing. There are inconsistencies in what you have written. So, you need to sort those things out. Such as:
but he was a keen investor in the past buying and selling through a well known broker.
and
His attitude to risk was very conservative.

Those two things do not go hand in hand when buying shares. Single company shares are higher risk than funds. If he was a keen investor and his mind was sound then why should they not sell him shares?

The problem with these investments compared to say a normal share like BT or Tesco is that they were not tradeable by any other broker, not listed on the stock market and not sellable in any way I could establish. It’s as if a person made up a company and a quantity of shares and offered them out to people. They seem worthless to me as you cannot do anything with them.

They seem worthless to you but are they worthless or are you just assuming?
Have you asked CSS for redemption figure if they were sold? Have they come back and said they cannot be sold?

Now I am going to give it a shot at making a complaint that he was mis sold these investments.

Remember that these are not regulated investments and they are stockbrokers. They do not provide regulated investment advice. So, missale allegations work a little differently to say a bank selling a retail financial product. They provide non-advised and advised stockbroking services.

Is there any reason why I can’t challenge them now (I know they changed their name slightly, was this to protect themselves somehow)?

They havent changed their name slightly. At least not according to companies house or the FCA. The introduced a new trading style using their initials instead of their full name. However, that is very common nowadays. Changing names doesnt alter any protections. They are still the same legal entity they started a decade ago.

What do I ask for, all £50k back, £50k plus interest or half or let them suggest figures?

As you havent said what they have done wrong yet (apart from a few assumptions) it is difficult to answer that.

I am partly playing devils advocate with the above comments. There could be wrongdoing but equally, there could be no issue at all. As your father was a keen investor, as you say, maybe he liked putting small investment amounts into startups. Maybe he contacted them. Maybe it was non-advised. There are lots of holes.

CSS have only two complaints published at the FOS. 1 rejected and 1 upheld. Both about CFDs. For a firm that has been going since 2008, that is a very low number if they were selling dodgy investments.

happyhero

Apologies for leaving some details out or not being totally clear but I will now try to rectify that. Thank you to all of you for your inputs.

Firstly by CSS I mean Charles Street Securities, who changed their name slightly in the past. I can’t remember what the change was right now but it was the same name but they added a bit at the end or took a bit away or something like that. Sorry I should have given the full name in my first post.

Some of the companies he bought via CSS were Digitek Limited (Dissolved), Greenkote (still active I believe), iPoint Plc (Dissolved), Libertas LLP Loan Notes (Dissolved), Peer TV Plc (Dissolved). These are some of them. You see the pattern.

The financial loss that he incurred is that he was somehow encouraged to buy stocks that are totally against his character by being super high risk. He also invested in VCT’s so that was his way of venturing into small riskier companies and a hell of a lot safer way to do it. If I was offered the chance to invest a few thousand in a non- listed on the stock market company, that I’ve never heard of by some guy who phoned me up I would hang up fast as to me it would seem obvious that I would never see a penny back, and my stepfather was far more restrained than me. (I do invest too by the way so although an amateur I do have some understanding of investments such as VCT’s etc).

So the idea is, he was wrongly encouraged to buy a totally unsuitable product and so his loss is he should never have put any money in these products and if he hadn’t he would have invested the money where he normally did in the past and that was mainly with Hargreaves Lansdown into funds and shares. He used to have VCT’s as well not bought through HL. They came through the post as is fairly normal with VCT offers I believe.

Yes I agree investing is risky so that means he did take risks, but he was very clever, great with money and maths and very sensible only putting money in very safe investments, that’s why I used the word conservative. I don’t know how to better describe him. If I gave him money to invest I would be confident he would make me a profit albeit maybe not huge like a risky company could maybe achieve.

Yes I do have power of attorney (POA) for him, I did mention it but I should have been clearer.

I have share certificates for many of his holdings but some I only have general paperwork about the company and some I have nothing. I have no idea why he has certificates missing or other paperwork and he is not able to tell me now in his mental state. I’ve searched everywhere, possibly he wasn’t even sent the missing paperwork.

He was very thorough and orderly so if he had it I would have expected to find it.

I would not think this but if I for one moment go along with the idea that my stepfather would buy some of these shares as part of a varied portfolio then I would have to say he bought too many. It became too big a portion of his portfolio. His HL account had about nearly £120,000 at its best (he showed it to me as his mental state went down and he wanted me to help), and these dodgy shares from CSS amounted to £50k. I still can’t work out why he bought them and how they managed to encourage him to do so. Knowing him I would have expected him to laugh and say no way.

With HL he had about £80k of the £120,000 in funds, he thought they were much steadier/safer but he had a couple of bonds in the HL account too, the rest was in shares. The VCT’s were on top of this having about £5k in them as a maximum and we moved these into HL before he soon after cashed them in. Much of his money is now gone for his care and they bought a VW Polo new a while back with it too.

I wasn’t party to the calls he received from CSS, and he cannot help me now. All we know is they phoned him up when they had something new so I don’t know how we could establish if he was advised or not advised. I can only say we strongly feel he was encouraged to buy something totally inappropriate by clever sales talk.

He now lives in a Nursing Home and I go to see him regularly with my mother but he is not capable of any real discussion. Any recovered money would go to helping my mother and paying for the crazy fees we have to cover for the Nursing Home.

Hopefully I’ve filled in a few blanks now but I really appreciate the help so ask away if there is anything else.

dunstonh

He also invested in VCT’s so that was his way of venturing into small riskier companies and a hell of a lot safer way to do it.

VCTs are viewed as very high risk and typically only used by around 1% of the population. Mainly advanced investors.

So, we have someone who self invested with HL and bought VCTs. In isolation of other things, that does suggest are more advanced investor or someone completely out of their depth.

I still can’t work out why he bought them and how they managed to encourage him to do so. Knowing him I would have expected him to laugh and say no way.

This is a significant weakness in any complaint as you cannot allege hypothetical scenarios.

CSSP, in their LLP form, have 8 ombudsman complaints against them and all 8 were rejected by the FOS.

At the end of the day, all you can do is make a complaint. There are weaknesses in it and I don't think anyone here can call the outcome based on what we know so far. Was your father an experienced investor with his DIY investments and VCTs who was keen to invest in new opportunities with a small amount of his overall wealth or was he a low knowledge consumer who relied on advice and got shafted? As it stands, you have painted him as both.

Reaper

happyhero wrote: »

I wasn’t party to the calls he received from CSS, and he cannot help me now. All we know is they phoned him up when they had something new so I don’t know how we could establish if he was advised or not advised. I can only say we strongly feel he was encouraged to buy something totally inappropriate by clever sales talk.

It seems to be speculation at present. It is equally possible in his declining mental state he was asking for high risk opportunities.

Given the lack of evidence to use in a complaint I would suggest starting with the company itself. Write to them about the list of purchases. Ask them if they are able to confirm these came about as a result of a company representative calling him about them (rather than the other way round) and if so what criteria made them select these particular opportunities as suitable for him.

It may or may not evolve into a complain depending on the answers.

Malthusian

Reaper wrote: »

It seems to be speculation at present. It is equally possible in his declining mental state he was asking for high risk opportunities.

"He was asking for it" is not in itself a defence.

If his faculties were declining the firm should have had a vulnerable client policy in place, if of course they could reasonably be expected to know he potentially fell into that category. OP: how old was he?

In addition, as they were advising him they needed to be able to demonstrate he had capacity for loss to absorb the total loss of the £50k he invested in this stuff. And a sufficiently high attitude to risk profile. ("Would you like to buy some worthless penny shares" "Ok I guess" is not risk profiling.)

Given the lack of evidence to use in a complaint I would suggest starting with the company itself. Write to them about the list of purchases. Ask them if they are able to confirm these came about as a result of a company representative calling him about them (rather than the other way round) and if so what criteria made them select these particular opportunities as suitable for him.

Exactly what I would do in the OP's position.

If these penny shares were recommended legitimately - i.e. they fitted his objectives and risk profile - they should have their !!!!!! covered in adamantium plate mail. They will have been well aware that they were running a huge regulatory risk. And they will happily send you all the evidence they've collected over the past few years to cover that risk.