Accountancy firm faces £3.717m compensation bill

AN accountancy firm will pay out £3.717m in compensation to investors after facing action from the Financial Services Authority.

A High Court ruling yesterday confirmed the payments relating to an unauthorised collective investment scheme run by Wakefield accountants Upton & Co.

The firm operated a collective investment scheme known as the “Currency Plan” promising investors high rates of return. The money was to be used to invest in foreign exchange markets.

According to the Financial Services Authority, however, there was only limited foreign exchange trading and very little was ever returned in cash.

Margaret Cole, director of enforcement and financial crime at the FSA, said: “This is a fantastic result. It is so rare for victims of unauthorised businesses to get

any money back because normally the money is misappropriated and victims of unauthorised firms are not protected by the Financial Services Compensation Scheme.

“But as we intervened early in the scheme’s life cycle we were able to recover a large proportion of the original amount invested. Normally the amount recovered, if any, is often just a few pence in the pound so securing this amount is a real coup.”

The FSA began investigating Upton in February 2009 and a month later secured a High Court injunction to freeze the firm’s assets. Earlier this year, the FSA reached an agreement with Upton for the firm to pay compensation of £3.6 million immediately and a further £840,000 in monthly instalments.

Margaret Cole added: “Upton had no business running one of these schemes and the firm risked millions of pounds of investors’ money – something you’d expect a firm of accountants to know better.”

No-one was available to comment at Upton & Co.