FSA stops Trident unauthorised investment business

On 14 December 2000 the High Court in London granted an interim injunction restraining Trident from carrying on investment business in breach of the Financial Services Act 1986 (the Act) and also freezing the assets of the company. Trident attended a further hearing on 20 December 2000 at which they agreed that the interim injunctions obtained by the FSA should be continued until trial or further order.

Trident provides share dealing and investment advice services and has been targeting UK investors from Spain. Trident, which is principally based in Barcelona, has a London address, telephone and fax numbers, all of which appear on Tridents literature as well as addresses and details in Barcelona and Frankfurt. Tridents London address, however, is only an accommodation address with all correspondence being forwarded to Spain. Telephone calls to Tridents London number are diverted to Spain.

Trident attracts UK customers by sending a mailshot, in the form of a card, to shareholders in a quoted company. The mailshot offers to provide the shareholder with a research report into that quoted company. After the card has been returned, Trident telephones the UK customers offering dealing and advisory services.

The FSAs proceedings allege that Trident has conducted investment business in breach of section 3 of the Act and that unapproved investment advertisements have been issued in breach of section 57 of the Act. Trident did not obtain approval for its investment advertisements and was not therefore able to rely on the overseas persons exemption contained in the Act (see notes). Additionally, the FSA has alleged that Trident has made misleading statements, promises or forecasts in breach of section 47 of the Act.

On 30 May 2000, the FSA placed an alert on its consumer webpage setting out the dangers for UK investors of using the share advisory and dealing services of unauthorised firms based overseas.

FSA Director of Enforcement, Dan Waters, said today,

Overseas firms soliciting UK investors seems to be on the increase. Investors should be on their guard. If you want the full protections of the UK regulatory system, then you should check with the FSA whether or not a firm is authorised to do business in the UK."

While investors may choose to deal with overseas firms, they need to realise that they will not receive the protections of the UK regulatory system, and may not always have protections from an overseas regime. The FSA can help investors to check the regulatory status of firms. Investors can look on the FSAs website (www.fsa.gov.uk) to see if a firm is authorised in the UK, or call the consumer helpline on 0845 606 1234.

Notes for editors

1. Tridents Spanish address is: 288 Provenza, pral, Barcelona, 08008, Catalunya. Trident is not authorised to give financial advice or offer share dealing services in Spain. The Trident company, Fraser Lindhardt & Webb Plc, is incorporated in the Seychelles.

2. Section 3 - No person shall conduct investment business in the UK unless he is an authorised or exempted person. Contravention of section 3 of the Act is a criminal offence punishable by 6 months to 2 years in prison, a fine, or both.

3. Section 57 - No person other than an authorised person shall issue or cause to be issued an investment advertisement in the UK unless its contents have been approved by an authorised person. Contravention of section 57 is a criminal offence, punishable by the same penalties as section 3.

4. Section 47 - Any person who makes a statement, promise or forecast which he knows to be misleading, false or deceptive or dishonestly conceals any material facts; or recklessly makes (dishonestly or otherwise) a statement, promise or forecast which is misleading, false or deceptive, is guilty of an offence, if he makes the statement, promise or forecast or conceals the facts for the purpose of inducing, or is reckless as to whether it may induce, another person to enter or offer to enter into, or to refrain from entering or offering to enter into, an investment agreement or to refrain from exercising, any rights conferred by an investment. Contravention of section 47 is a criminal offence, punishable by 6 months to 7 years in prison, a fine, or both.

5. The overseas persons exemption is contained in paragraph 27 of schedule 1 of the Act. The provisions of the Act do not apply to any advice given, offer or agreement made or transaction entered into by an overseas person with a person in the United Kingdom if the transaction, offer, agreement or advice is a result of an approach made by the overseas person which has not contravened either section 56 (which outlaws cold-calling) or section 57 of the Act (see above).

6. In a press release issued on 28 December 2000, the FSA alerted UK investors to action by the Spanish securities regulator against Thibault, another company targeting UK residents from Barcelona. Thibault had complied with the relevant provisions of the overseas persons exemption under UK law. The FSA assisted the Spanish regulator in its action against Thibault.

7. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal. The FSA regulates the financial services industry and has four objectives under the Financial Services Act 2000; maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.