SRA issues a further warning on investment scheme
Solicitors Regulation Authority
2 min read
The Solicitors Regulation Authority (SRA) has today issued a further Warning Notice about solicitor involvement in fraudulent investment schemes.
The increase in these scams has already prompted warning notices to the profession and the public, most recently in September 2016, as well as the December 2016 Risk Outlook report. The SRA has received 12 reports about potential investment scams in the nine months since the last warning notice, an increase on the 18 reports in the preceding 18 months. There has also been increased enforcement action.
Recent cases include Sanders and Co, where many investors have lost money in a Brazilian Ecohouses scheme, and Naresh Chopra, where he was found to be acting for investment companies offering opportunities in diamond and fine art trading.
The number of solicitors involved is very small, but the impact is very significant both in terms of damage done to the reputation of the profession and the losses sustained by what are often vulnerable members of the public. People have already lost substantial amounts, potentially totalling hundreds of millions.
As a consequence, the SRA is forecasting a rise in high value claims on the Compensation Fund that will require settlement in the next 18 months. Not every case will result in successful claims, but it is important that sufficient funding is available. So, in further action, contributions for solicitors in 2017/18 will be increased by £8 - from £32 to £40. Firm contributions will increase by £230 from £548 to £778.
Paul Philip, SRA Chief Executive, said: "We know that the vast majority of solicitors and law firms would not knowingly become involved in fraudulent schemes.
"But those who do engage in these schemes undermine the reputation of the profession and cause very real harm to the public. We have issued a series of warnings to the profession and today sees us do so yet again. And we will take robust action where we find solicitors have indeed participated in schemes designed to defraud the public.
"Solicitors and law firms are rightly respected and their involvement in fraudulent investment schemes can give the impression of credibility or security. So their involvement in such schemes entices people to invest, which is leading to many individuals losing significant sums of money."
The new warning notice can be found here: http://www.sra.org.uk/solicitors/code-of-conduct/guidance/warning-notices/Investment-schemes-(including-conveyancing)--Warning-notice.page
