Company director who “abused position” sees business wound up

Blog Liquidation SMEs

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The director of an investment firm has been banned from running further companies after his business was placed into liquidation and investigated for financial wrongdoing.

GEC Consultancy Ltd, incorporated in 2014, provided investment services to clients seeking to trade in the global financial markets, as well as offered investment advice to those who wanted to manage their own trades.

But after running into financial difficulty in November 2015, the company was placed into creditors’ voluntary liquidation (CVL).

According to the report, the company’s collapse was looked into by the Insolvency Service, with an investigation ensuing shortly after.

The investigation found “several instances of wrongdoing”, all of which led to the detriment of creditors and investors.

Investigators say they discovered that while more than £194,000 worth of funds were received from investors, just £96,000 was invested in a foreign currency investment platform, increasing in value by approximately £22,000. Furthermore, just £57,000 was returned to investors on the company’s collapse.

It later emerged that £61,000 of investor money was used to settle the company’s outstanding liabilities and loans, while the sole director “pocketed” £17,000 for himself.

The Insolvency Service also discovered further accounts of wrongdoing, including allowing exaggerated claims on the marketing literature that funds would be “safe and secure at all times” and that investor funds would be held in a segregated account.

GEC also claimed that investors would receive a “full reimbursement of all the capital invested at the end of the investment period”.

Ultimately, by the time of the company’s liquidation, some £200,000 remained outstanding to investors.

Because of the director’s failure to run the company in accordance with FCA rules, he was also banned for a period of 11 years, which disqualifies him from directly or indirectly running a company during that time.

Commenting on the investigation, Robert Clarke, Head of Company Investigation at the Insolvency Service, said: “[The director] abused his position by knowingly taking people’s money for investments he knew were never viable.

“An 11-year disqualification is a substantial ban and should serve as a warning that we will always look to remove from the business community those directors who act below the standards that should be expected of them.”