Dodgy investment by my stepfather, can I claim for him

Thrugelmir

happyhero wrote: »

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.

Sounds like a well established relationship. What's the name of the Company that the investments were made into.

There are plenty of high net worth individuals who like to take a flutter with sizable sums of money. Trying to find the start up that's going to produce on 10 fold return on either a trade sale or market listing. Having worked for a company that raised some £21 million in private funding only to never succeed. I have seen the other side of the fence.

masonic

"This web site is only open to investors who confirm that they are SOPHISTICATED or HIGH NET WORTH or RESTRICTED under the Conduct of Business Rules of the Financial Conduct Authority."
http://www.charlesstreetsecurities.co.uk/

Any investor declaration they hold for him could be enlightening.

buglawton

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.

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.

CSS is FCA regulated so yes, do that.

happyhero

dunstonh wrote: »

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.



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.

I bow to your superior knowledge (and that’s why I ask your help) and would never dare challenge you on these matters but what I would say in opposition to what you have said about VCTs is, that if we go with the idea that they are very risky then I would say having less than £20k (my rough guestimate of what he had) it seems like a fairly reasonable dabble (unlike the £50k with CSS) for a cautious person who wanted to try his hand with VCT’s and who has a maybe £140,000 portfolio.

I’m not sure of his reasons for taking them out but he guided me to do the same when I naively sold a load of BT shares thinking I was being clever only for him to point out I had made a Capital Gain big enough to cost me tax. He pointed out to me the tax advantages and risks of a VCT and advised me which ones to get and about the fact it would allow me to defer my gain to a later year and by careful management lose the Capital gain saving myself some tax.

He made me invest in British Smaller Companies and Northern Ventures which he had too and I have kept. They seem to have given me a reasonable return over the years(his are sold now).

So again in defence of VCT’s being risky, whilst I understand the risk around them, I feel they have worked well for me and if managed well as a small part of a portfolio, are not so risky. I am not challenging you but just giving you my experiences and thoughts on VCT’s. Perhaps my stepfather guided me so well that my ideas of risk in VCT’s is a bit biased or skewed.



Thank you for the information regarding the Ombudsman but it has put a big dent in my confidence as those 8 people, some probably far smarter than me have failed even after going to the Ombudsman. It now looks hopeless especially with the weaknesses in our case you have pointed out. I must ask though how there can be only 8 cases, surely there would be hundreds of people making claims about a company that promotes such regularly failing, non-tradeable stocks?



One thing I would like to expand on here that we have not really explored yet is the type of product that CSS was pushing, so far we have mainly concentrated on whether my stepfather has a case i.e. was he wrongly sold but what if we forget about my stepfather for a moment and concentrate on the products being sold. Are we not boarding on something that would be miss sold no matter who it was sold to, no matter what their attitude to risk was, I suppose a bit like PPI’s, for want of a better example. And therefore should not anyone who buys these stocks be entitled to a refund of their money plus interest.

I mean look just how bad they are, you can’t sell them back, you cannot trade them with any broker, they produce nothing over the years and there is a strong indication that they will all be eventually dissolved. I think it’s obvious what is going to happen but I would have thought if there was ever any light at the end of the tunnel at least 1 out of 15 would have made some progress towards getting listed on the stock market and become tradeable.

I do wonder if these companies are real or actually do much in the their fields at all that they claim to be part of, developing this or that, or if this is all just paperwork to get money out of people.

This doesn’t seem like gambling to me or something that someone who likes risks to me would get into this looks like certain prolonged death as far as the money is concerned. At this point they would have a hard job convincing me something good would come of an investment in these companies. Seems to me you’d do better with the lottery. I can only go on what I have experienced of course and can’t prove any failure rate but I bet its 100% failure rate or very close to it. Surely that would qualify anybody for a claim.

happyhero

Difficult to explain this clearly but we are quite aware (must be a better word for this) in our family and would not easily have missed his mental state failing. My stepfather was someone everyone went to for advice, whether it be school work, advanced maths, political things, or investing. He seemed very clever on everything and it was from about 2011 that things seemed to start to go wrong for him so I would say most of the period we are talking about (2003 to 2011) he was very good still. I have no idea how I could prove that in a claim but I really believe he was very good still obviously and especially as we go back towards 2003, so buying these stocks still strikes me as very odd.

Yes Reaper, I think I will try what you say first and ask some questions. I’m not sure whether their responses will be much use but it’s worth a try rather than going straight in with the attack first.

happyhero

masonic wrote: »

"This web site is only open to investors who confirm that they are SOPHISTICATED or HIGH NET WORTH or RESTRICTED under the Conduct of Business Rules of the Financial Conduct Authority."
http://www.charlesstreetsecurities.co.uk/

Any investor declaration they hold for him could be enlightening.

If this is the case I do have doubts that he was aware of this (he was very thorough in everything he did so I can’t be sure here) and I wonder how it is effected by the fact they constantly phoned him.

I’ll ask if they have anything along the lines of an investor declaration for him.

greenglide

Are you certain that it was CSS that "advised" him do these purchase?


It wasn't a 3rd party "adviser" and he then placed the trades himself with CSS?


You may be following the wrong trail.

masonic

happyhero wrote: »

I bow to your superior knowledge (and that’s why I ask your help) and would never dare challenge you on these matters but what I would say in opposition to what you have said about VCTs is, that if we go with the idea that they are very risky then I would say having less than £20k (my rough guestimate of what he had) it seems like a fairly reasonable dabble (unlike the £50k with CSS) for a cautious person who wanted to try his hand with VCT’s and who has a maybe £140,000 portfolio.

I’m not sure of his reasons for taking them out but he guided me to do the same when I naively sold a load of BT shares thinking I was being clever only for him to point out I had made a Capital Gain big enough to cost me tax. He pointed out to me the tax advantages and risks of a VCT and advised me which ones to get and about the fact it would allow me to defer my gain to a later year and by careful management lose the Capital gain saving myself some tax.

He made me invest in British Smaller Companies and Northern Ventures which he had too and I have kept. They seem to have given me a reasonable return over the years(his are sold now).

So let me get this straight, your risk-averse stepfather not only had the confidence to invest in products like VCTs, he felt knowledgeable enough to advise you about these investments? That does seem to speak to a problem that extends beyond his CSS investments.

So again in defence of VCT’s being risky, whilst I understand the risk around them, I feel they have worked well for me and if managed well as a small part of a portfolio, are not so risky. I am not challenging you but just giving you my experiences and thoughts on VCT’s. Perhaps my stepfather guided me so well that my ideas of risk in VCT’s is a bit biased or skewed.

I'd agree for high net worth or sophisticated investors with a high risk tolerance they can be a useful part of a much larger portfolio (say 5-10% max), but those who invest in them do need to certify as such and would find it even harder to challenge suitability as a result.

I must ask though how there can be only 8 cases, surely there would be hundreds of people making claims about a company that promotes such regularly failing, non-tradeable stocks?

Perhaps the majority of their customers understood the risks, or were more experienced than your stepfather. Few firms will open themselves up to complaints by sucking in people who do not have a good understanding of investments, but if someone talks a good game it can be easy to overestimate their understanding. A normally risk averse person holding £20k of VCTs would be a clear red flag they didn't understand as much as they thought they did.

One thing I would like to expand on here that we have not really explored yet is the type of product that CSS was pushing, so far we have mainly concentrated on whether my stepfather has a case i.e. was he wrongly sold but what if we forget about my stepfather for a moment and concentrate on the products being sold. Are we not boarding on something that would be miss sold no matter who it was sold to, no matter what their attitude to risk was, I suppose a bit like PPI’s, for want of a better example. And therefore should not anyone who buys these stocks be entitled to a refund of their money plus interest.

PPI is a regulated product. VCTs and unquoted stocks are unregulated products which do not have the same level of consumer protections. That's why there are restrictions around marketing them to consumers. Unfortunately, the same self-certification process one would need to go through to be able to invest in VCTs opens the door to other types of unregulated investments (not suggesting VCTs are lower risk).

I mean look just how bad they are, you can’t sell them back, you cannot trade them with any broker, they produce nothing over the years and there is a strong indication that they will all be eventually dissolved. I think it’s obvious what is going to happen but I would have thought if there was ever any light at the end of the tunnel at least 1 out of 15 would have made some progress towards getting listed on the stock market and become tradeable.

I do wonder if these companies are real or actually do much in the their fields at all that they claim to be part of, developing this or that, or if this is all just paperwork to get money out of people.

Many companies with share capital are very successful and remain unlisted. There are millions of unlisted companies in the UK, these companies make a significant contribution to the UK economy. That doesn't mean investing in unlisted companies is not high risk, but it isn't a scam and if you complete the necessary certification and instruct an execution only service to buy shares, then they wouldn't normally be considered responsible for the consequences even if you had a chat about your choices on the phone.

happyhero wrote: »

If this is the case I do have doubts that he was aware of this (he was very thorough in everything he did so I can’t be sure here) and I wonder how it is effected by the fact they constantly phoned him.

I’ll ask if they have anything along the lines of an investor declaration for him.

I used to invest through an execution only stockbroker, known at the time as SVS Securities. They started phoning me wanting to have a conversation about AIM shares and such. They were just trying to encourage me to trade more so that they'd earn more dealing fees from me. No doubt this firm takes a similar approach.

dunstonh

And therefore should not anyone who buys these stocks be entitled to a refund of their money plus interest.

That would be counterproductive. If that was the case, we could all invest in very high risk stuff and keep the upside when it happens or get a refund with interest when it doesn't.

happyhero

Reaper wrote: »

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.

Obviously I can write and ask them just that, but if I am going to get them to cooperate why shall I say I want that information?


Will it not help to give them reason, (made up maybe), to get them to try and help me solve a problem?


What do you think?