The British Financial Conduct Authority (FCA ) has initiated criminal proceedings against Daniel Pugh, charging him with one count of fraud and three breaches of the Financial Services and Markets Act 2000 (FSMA).

The regulator alleges that between 1 March 2019 and 31 August 2020, Pugh defrauded investors out of around £1.3 million through an unauthorized investment scheme known as 'Imperial Investments Fund'.

FCA’s Allegations against Pugh

Specifically, the FCA alleges that Pugh conspired to defraud by making numerous misrepresentations about the interest rates offered, trading activity, and profits from the scheme to potential investors. It is also alleged that Pugh carried out regulated activities in the UK, including accepting deposits, operating a collective investment scheme, and inducing people to invest. He offered above-stated services without authorization from the FCA or qualifying as an exempt person.

Pugh was charged at Westminster Magistrates Court, and the case has been transferred to Southwark Crown Court. The defendant is scheduled to appear there on 15 August 2023 for a plea and pretrial hearing.

Legal Background

Conspiracy to defraud is a common law offence with a maximum sentence of 10 years imprisonment upon conviction.

Under Section 19 of the FSMA, a person cannot engage in a regulated activity in the UK unless they are authorized by the FCA or exempt. Breaching Section 19 of the FSMA is a criminal offence with a maximum sentence of two years imprisonment.

Under Section 21 of the FSMA, a person must not communicate an invitation or inducement to invest unless they are authorized by the FCA or an authorized person approves the content of the communication. Breaching Section 21 of the FSMA is also a criminal offence that carries a maximum sentence of two years imprisonment.

FCA Divides and Conquers on Many Fronts

The UK’s regulator is prominent in Europe, frequently alerting the public to potentially fraudulent investment firms and announcing significant financial penalties.

Recently, the FCA levied a substantial penalty of £2,452,700 on Bastion Capital London Limited. This consequence was due to considerable shortcomings in financial control, specifically tied to cum-ex trading. The regulatory body found that Bastion inadequately managed the risk of being exploited for fraudulent trading and money laundering activities.

Furthermore, the FCA has been vigilant in spotting and impeding the operation of unlawful crypto ATMs throughout the UK. Since the commencement of 2023, the regulator has scrutinized 34 sites believed to harbor these devices. This effort, carried out in collaboration with other law enforcement agencies, has successfully identified and disrupted 26 machines operating outside the law.

In an earlier instance this year, the FCA announced that the mastermind of a boiler room scam of $3.6 million would face an additional four-year prison term. Sentenced initially in 2018 to 11 years behind bars, the individual was further penalized with an extra sentence due to non-payment of the confiscation order.