UK's Financial Conduct Authority (FCA), the governments financial regulatory arm has announced that it has taken Capital Alternatives and several other firms and individuals to court over investment schemes that they believe are illegal.
The court action focuses on two investment schemes:
"We do not regulate the sale of land, property or carbon credits, but we do regulate CISs and a firm must be authorised by us to operate them from the UK. We also believe the defendants made misleading statements or gave false information when promoting the schemes to investors. What this means for investorsThe High Court has ordered a preliminary trial to decide whether the schemes are CISs. The date of this trial has not been confirmed but it should take place in the autumn of 2013," it said in a statement.
If the court decides the schemes have been run or promoted illegally as CISs, it can order the defendants to pay the FCA compensation that will then be paid to investors in the schemes.
"The value of the assets held by the defendants is not clear at this stage, so we are not sure how much could be returned to investors. However, you should be aware that, even if the court grants an order for investors to be compensated, we have found in similar cases that the defendants usually do not have enough assets or funds to pay the full amount ordered," said the FCA.
In response, Capital Alternatives said that "it relied on guidance from the Financial Service Authority (FSA), the FCA's predecessor, in relation to the products which it promoted."
According to Capital Alternatives, "the company has been corresponding with the FSA, and subsequently the FCA, for over 3 years in relation to the products which it has promoted in order to assist the regulator with its enquiries. Despite the positive guidance previously received from the FSA, the FCA now appears to be taking a different view. Capital Alternatives will defend its position vigorously at the High Court hearing listed for October. In the meantime it will continue to carry on business as usual."