This is the next article in a series by the Director’s Friend.
(‘IS’). This was attended by a lot of stakeholders in the insolvency industry.
Director Disqualification current misconduct trends:
From a perspective of director disqualification, the IS have identified a growing number of trends in terms of misconduct at least worthy of director disqualification proceedings being considered to include:
- Wine investments (see for example: https://www.gov.uk/government/news/misleading-wine-investment-company-with-shadowy-majority-shareholder-closed-down-following-insolvency-service-investigation);
- Land banking (see for example: https://www.gov.uk/government/news/landbanking-company-wound-up-for-misleading-investors);
- Carbon credits (see for example: https://www.gov.uk/government/news/major-carbon-credit-network-unpicked-by-the-insolvency-service and https://www.gov.uk/government/news/directors-of-1m-carbon-credit-scam-banned;
- Pension liberation (such as for example the investment into storage pods – see: https://www.gov.uk/government/news/retirement-for-pension-trustee-companies-following-insolvency-service-investigation and see: https://www.gov.uk/government/news/store-first);
- Healthcare supplements (see for example: https://www.gov.uk/government/news/scam-warning-issued-as-company-targeting-the-elderly-is-shut-down); and
- Fancy coloured gemstones (see for example: https://www.gov.uk/government/news/companies-running-coloured-diamonds-scam-shut-down).
The theme seems to be that a public interest winding up petition is presented, the offending company wound up by order of the Court and then director disqualification proceedings follow.
These are in addition to the, at present, usual themes of the insolvent company not paying HMRC or employing illegal workers, being as a consequence fined by the Home Office and thereafter being placed into liquidation to avoid paying the fine.
Future Director Disqualification focus:
According to the IS complaints about Binary Options appear to be on the increase.
According to the FCA website these are a form of fixed-odds betting on movements in financial markets. Typically, a trade in binary options involves a simple question of whether an event will happen or not – for example, will the price of a particular share or asset go up. The outcome is either yes or no, hence the term binary option. If the investor is correct, they ‘win’ and should see a return on their investment. If the investor is wrong, they lose their full investment.
For more details please also see the Action Fraud website.
Top tips by the Director’s Friend:
- When you are faced with an investigation by the IS the Directors Friend’s advice is that you should usually engage with that investigation and put forward carefully crafted answers and representations to the IS.
- If the well-advised director does not put across their side of the story with the assistance of specialist legal advice then that director (however well intentioned) could make matters worse for themselves.
- Your legal adviser will be able to advise you as to the risk of other parallel investigations that may be going on at the same time. To include criminal and compensation proceedings.
- If the IS can be persuaded that it is no longer in the public interest to bring director disqualification proceedings then in the Directors Friend’s experience the IS can, will and do drop the investigation or discontinue their case. Director disqualification is not inevitable.
What to do now:
My name is Richard Cole. I am a Solicitor who formerly worked at the IS carrying out director disqualification investigations. I am now the Director’s Friend. Why not contact me to discuss on: +44(0) 1992 558411. The earlier that you speak with me the more that I can likely help.
Until the next time…
THE DIRECTOR’S FRIEND