SFO throws book at £63m brokers

The Serious Fraud Office has charged two disgraced brokers for fraud offences, after regulators liquidated their £63 million operation back in 2012.

The SFO has charged two former company directors with fraud and forgery offences, after around 750 investors put £63 million of investment into property investment firm, Arck.

Following an investigation from financial regulators, it was found that Kathryn Clark and Richard Clay allegedly created and marketed various unregulated financial products – distributed via a network of IFAs.

The SFO investigated allegations of serious fraud involving investments made in the firm, and self-invested personal pension provider HD Administrators, where Clark and Clay both held directorships.

Initial reports estimate that £63 million was invested into these products, including funds from IFAs themselves.

Following a Financial Services Authority investigation into the validity of the scheme, Arck was put into liquidation in February 2012.

Back in September of this year however, The Financial Services Compensation Scheme (FSCS) reported that it had received a number of claims against independent financial advisers that were no longer trading in relation to investing in Arck.

The FSCS claimed to be awaiting the conclusion of the SFO investigation before determining the liability of the advisers that endorsed the Arck products.

As a result, it brought down a number of IFAs with it who had advised clients to invest in property deals overseas.

In some cases, clients included pensioners who invested their pensions into what they believed were safe investments – suffering crippling losses as a result.

A law suit was then launched against Yorkshire Bank, with claims amounting to £23 million for negligence related to investments in Arck.

It was claimed that Yorkshire Bank failed in its duty to protect client’s money which it held on account for the company.

The result of this case is still outstanding, with Yorkshire Bank claiming that it will respond by the end of this month – the latest possible date under the current laws.

The 400 or so investors are holding the bank responsible for their losses, and continue to demand repayment.

Both Clark and Clay have been bailed to appear at Westminster Magistrates' Court on 29 November 2013.