Documented Case

Capital Alternatives Limited and others

The FCA succeeded in High Court proceedings concerning four unauthorised collective investment schemes, including a Bitcoin-linked scheme, with £16.9m ordered in restitution to investors.

Investment type: Unauthorised collective investment schemes, including a Bitcoin-linked scheme
Documented investor losses: £16.9m ordered in restitution by the High Court (FCA)
Date / period: Schemes promoted from 2009; High Court judgment 26 March 2018
Relevant organisation: Financial Conduct Authority / High Court
Nature of the matter: Unauthorised collective investment schemes — civil restitution

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Background

Capital Alternatives Limited and a number of associated individuals promoted four collective investment schemes to UK retail investors. The schemes included a Bitcoin-related investment alongside agricultural land and carbon credit propositions.

None of the schemes was authorised as a collective investment scheme.

What investors were promised

Investors were offered high returns from alternative investments, marketed with statements the court found to be false, misleading or deceptive as to the nature and risk of the products and their regulatory status.

How the schemes operated

The schemes were promoted to retail consumers through marketing material without lawful authorisation and without adequate disclosure of risk.

Legal developments

After a lengthy legal process, the High Court handed down judgment on 26 March 2018 ordering the defendants to pay a total of £16.9m in restitution to investors under the FCA's powers in the Financial Services and Markets Act 2000.

What the case demonstrates

Cryptoasset propositions are frequently bundled with other unregulated 'alternative' investments sold by the same promoters, and investors are often exposed to several of them.

The case also stands as one of the larger restitution figures obtained by the FCA through civil litigation.

Key Lesson

Where an unauthorised collective investment scheme has been promoted, the lack of authorisation is itself a substantive legal point and not merely a technicality.

Source & Further Information

FCA wins case against Capital Alternatives Limited and others
Financial Conduct Authority — published 26 March 2018
View the official source

These case studies summarise matters recorded in public sources including FCA publications, Insolvency Service and Serious Fraud Office material on GOV.UK, court judgments and the Companies House register. They are provided for information only, are not legal advice, and do not describe work carried out by BJM Recovery Ltd for any client. Where an investigation or set of proceedings remains open, the position stated is the position recorded at the date of the cited source.

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How We Approach Investment Loss Cases

Every investment recovery matter is assessed individually. The circumstances of the investment, the available evidence, the parties involved and the applicable recovery process will determine the appropriate course of action.

Our starting point in any matter is the documentation. We reconstruct the investment chronologically from agreements, payment records, statements, correspondence and marketing material, and we establish precisely which entities and individuals were involved at each stage, and in what capacity.

We then examine what is on the public record: the Companies House position, any insolvency appointments, regulatory publications, enforcement action and court proceedings. Public records frequently determine which routes remain open, whether that is a creditor claim in an insolvency, a claim against a regulated party in the advice or pension chain, participation in a distribution administered by a regulator, or civil proceedings.

Where a matter has been formally referred to us, we deal with the referring organisation directly and work within the process that applies to that referral.

If you have lost money through an investment that has failed, become insolvent or stopped communicating, we can review the information available and set out the position clearly.

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Investment losses can be complex and every situation is different. If you have lost money through an investment that has failed, become insolvent or stopped communicating, our team can assess the information available and discuss the potential next steps.

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