The Financial Conduct Authority (FCA) has won the Court of Appeal case against a case against unregulated introducers Avacade and Alexandra Associates.

On Wednesday (4 August), the Court of Appeal, which was submitted by Alexandra Associates, upheld findings of breaches against the unregulated introducer that was trading as Avacade.

The appeal, which began last month after being submitted in July last year, was put forward after the High Court ruled in favour of the FCA in a civil action against Avacade and Alexandra Associates after pension savers were persuaded to invest millions of pounds into risky, unregulated schemes.

The FCA alleged, and the High Court has now found, that Avacade, Alexandra Associates, Craig Lumis, Lee Lumis and Raymond Fox engaged in arranging and promoting investments without authorisation. It also found that they made false statements to investors that induced them to transfer their pensions into self-invested personal pensions (SIPPs). Avacade is in liquidation. 

More than 2,000 customers transferred a total of £91.8m into SIPPs. Around £68m of that was invested in products promoted by Avacade and Alexandra Associates and £905,000 was invested into a bond relating to a Brazilian property development. The two firms earned commissions in the region of £10.8m.

Last month, when the appeal began, Omid Khub of Zachary Khub Solicitiors spoke on behalf of Alexandra Associates' Craig Lummis and Lee Lummis and said: "We hope the Court of Appeal will clarify the hard-fought regulatory issues in this case which arise out of the application of the Financial Services and Markets Act 2000.

"It has always been the case that our clients', as introducers, ought not to have been singled out and be held solely responsible for the losses alleged to have been suffered by investors, and that the FCA ought to have also brought legal action against the regulated SIPP companies and IFAs who placed the investor in those investments."

FCA executive director of enforcement and market oversight Mark Steward said: "The Court of Appeal decision vindicates the original decision and will help vindicate the rights of more than 2,000 investors who have lost pension money through the defendants' conduct in leading them into these toxic and high risk investments."

First published by our sister title Professional Adviser