The British Financial Conduct Authority (FCA ) has commenced court proceedings against Argento Wealth Ltd (AWL) and Daniel Willis, its sole director, for unauthorized trading activities. The regulator wants to recover money that was lost by the victims due to the company's unlawful activities.
FCA Wants to Recover the Investors' Money
According to a press release published by the FCA on Tuesday, the UK financial markets regulator accuses AWL of three regulatory breaches. Firstly, the firm was alleged to have unlawfully accepted £2.8m as a deposit under an unlicensed investment scheme and loan agreements. Secondly, it unlawfully arranged investments totalling $9m in EMB Fund Limited (EMB), and thirdly, it breached financial promotion legislation and the restrictions placed on financial service providers in this regard.
According to the FCA, Willis was fully aware that his activities were unlawful. AWL, which he represented, was unable to produce any evidence to suggest that the company would repay the loans made to EMBs and retail investors. As a result, the company became officially insolvent.
"The FCA has obtained undertakings equivalent to interim orders freezing AWL's/Mr Willis' remaining assets. This action has been taken with the aim of protecting investors pending seeking final orders compensating approximately 13 lenders who lent money to AWL and many others harmed by AWL's unlawful investment promotion," the FCA stated in the statement.
It does not change the fact that, according to the FCA, investors who give their money to AWL will suffer significant losses. This is because the assets that remain in the hands of the fraudulent firm are far less than the sums needed to cover liabilities to all clients.
"No date has yet been set for the High Court trial concerning the restitution order," the FCA added.
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FCA Rejects 1400% More Rogue Financial Ads
Controlling inappropriate advertising of financial services has become one of the FCA's significant objectives over the past year. Allegations made to AWL in this regard involved 8,582 other financial promotions, leading to their amendment or removal. This is 1,400% more than the 573 financial promotion breaches in 2021.
The regulator also managed to significantly increase the number of fraudulent investment warnings to 1,800, which the FCA says was made possible by a significant improvement in available digital tools used to identify problematic firms and their fraudulent advertising and offers.
2022 Brought Record Number of Financial Fines
According to SteelEye's Fine Tracker, the industry has seen record financial penalties exceeding $7 billion in 2022. The US Securities and Exchange Commission alone has slapped the unlawful firm with $6.4bn of fines, including a $1.1bn penalty from its Crackdown on WhatsApp.
The FCA increased the number of penalties to 26 in 2022, which is a huge increase from 10 in 2021, with the highest fine at the end of 2022 paid by Santander UK. The bank's fine amounted to £108 million for prolonged AML breaches.
"There remains a lot of work to be done by financial services firms to ensure they do not fall short of their obligations . As regulators get more aggressive in their enforcement action, firms need to really think about how robust their compliance programs and policies are. Particularly against the backdrop of recession fears, pressure to perform is mounting. With that, firms of all sizes are putting de-risking strategies in place," Matt Smith, the CEO and Co-Founder of SteelEye, said.
