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Regulators warn against Graphene and other enticing ‘investments’

The FCA and SRA have beefed up their warnings about ‘High Yield’ investments as ingenious fraudstersthink up new enticing schemes to attract investors who are keen to beat the low interest ratescurrently being offered by banks and building societies.√جª¬ø

The Financial Conduct Authority [FCA] put out a warning on 15.10.14 which was directely specifically at Graphene,which is a type of carbon that may one day be used in display screens, electrical circuits and batteries known asa ‘nano material’.The FCA became concerned after they found evidence of a ‘graphene investment firm’ on the computers of a suspectedboiler room. The FCA believe that the problem stems from the fact that the market in graphene is unregulated, so it is difficult to confirm if the sale relates to a genuine product. Although governments and companiesare pouring billions of dollards into graphene research and development, it is unlikley that therewill commercial production of the material until around 2020.√جª¬ø

This warning follows on from secific FCA warnings about the sale of carbon credits ( certificates that representthe right to emit one tonne of carbon dioxide (Co2) which are tradeable. The FCA draw attention in bothcases ‘dubious high- pressure sales tactics’ being used to sell these instruments to investors.√جª¬ø

Other enterprising fraudsers are also selling ‘Rare Earth metals‘ which are chemical elements used in the manufacture of products like computers, mobile phones, battteris, satellites and wind turbines. Other scams have also been discovered by the FCA relating to tree and crop plots abroad and other ‘ethical and ‘alternative‘ investment opportunities, which seem to have a capacity to disappoint which far outweighs the risks to the investor. These include teak trees, jatropha, paulownia and biofuels with a predicted return of 15- 25 %after 5 years when the crops will be harvested and sold.√جª¬ø

The Solicitors Regulation Authority [SRA] are also concerned that fraudsters are targetting law firms to actas cover for the sale of such ‘investments’. on 10.9.2013, the SRA issued a warning on high- yield investmentfraud, pointing out that if it looks too good to be true, it usually is. They warn in particular against Prime Bank Instrument schemes and Private Placements, which often offer security and opinions from law firmsthat do not actually make sense, together with the use of undertakings and poorly drafted documentation.

There is a specific warning notice on the SRA about the use of a client account as an escrow service. see blog article 11th June 2015√جª¬ø√جª¬ø in relation tothe prohibition in Rule 14.5 of the SRA Accounts Rules 2011.  see blog artice 11th June 2015√جª¬ø.


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