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Unauthorised Forex Firm’s Bogus Investment & Other Scams

FCA Wins Case against an Unauthorised Forex Firm  & Warnings against Scams

10thJune 2019

Unauthorised Forex Firm

Last month the FCA won their case against an unauthorised forex firm, having made an application to the High Court. The firm in question was Xcore Capital Limited (Xcore) run by Mr Johnathan Chitty. Xcore and Mr Chitty had carried on an unauthorised investment scheme which took in at least £1 million from investors, yet it was found that only a small amount of the investors’ money was ever used for trading.

Whilst consumers handed over investment money in return for a 6% annual return which they were led to believe would be used by Xcore on forex and equity market trading, instead it was found that the investors’ monies were used to bankroll an office in Mayfair, brokers’ wages and the lifestyle of Mr Chitty. Mr Chitty’s personal spending included that of £102,000 spent on cryptocurrencies, £58,000 on luxury goods, £24,000 on a Rolex watch and £20,000 towards his wedding!

The FCA declared that the deposit taking scheme run by Xcore was done so without the required authorisation by the regulator and that Mr Chitty was knowingly concerned in the scheme. The Order of the High Court requires Xcore and Mr Chitty to pay the regulator £917,231 (being the full value of all outstanding sums to owed to consumers) so that the FCA may distribute any funds to consumers.

Mark Steward, the Executive Director of Enforcement and Market Oversight at the FCA, said: “Prompt action by the FCA stopped this scheme in its tracks and prevented victims incurring much greater losses.”  He continued to remind consumers to be “especially wary when contacted out of the blue about an investment opportunity, and about financial services firms offering investment opportunities without FCA authorisation.” He added, “If they’re not authorised, it’s probably a scam.”

And the warnings over investment scams continued with the FCA issuing a warning about  so-called cryptoassets and forex investment scams

Over £27 million reported lost to crypto and forex investment scams

Together with Action Fraud, the FCA is warning the public to be wary of investment scams carried out by bogus online trading platforms as it seems that over £27 million has been lost to scams involving crypto and forex investments in the last financial year alone (2018/2019).

Last year, cryptoassets and forex investment scams reports more than tripled last year to over 1,800 with fraudsters promising high returns form investments in cryptoassets and forex. On average victims lost over £14,600 last financial year (over £27 million in total).

Often fraudsters are using social media to promote their ‘get rich quick’ online trading platforms, often posting bogus celebrity endorsements and images of luxury items which then link to a website that looks professional and where consumers are then persuaded to invest.

Whilst initially investors will be led to believe that their investment has successfully made a profit, the returns eventually stop, the account is closed and the scammer disappears without further contact.

The warning comes as part of the FCA’s ScamSmart campaign to raise awareness of online trading scams, which is supported by the City of London Police.

Pauline Smith, the Director of Action Fraud, said: “These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms. It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.”

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA added: “We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms. Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal. Before investing online find out how to protect yourself from scams by visiting the ScamSmart website, and if in any doubt – don’t invest.”

Sage advice for any investor…

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