By Daniel Hunter
The Financial Services Authority (FSA) has obtained a court order against Monobank Plc (Monobank) which paves the way for €77,000 (approximately £64,000) of redress to be paid to victims of a boiler room scam.
Monobank, a UK incorporated firm, provided promotional literature stating that it was in the final stages of setting up a prepaid credit card service in the UK and Europe and had entered into commercial agreements to that effect.
However, the FSA found no evidence to suggest that any of this was true. Despite this, Monobank still managed to obtain a quotation on the Frankfurt Stock Exchange’s First Quotation Board.
At a case heard in the High Court in London, Mr Justice Peter Smith ruled that Monobank was complicit in offshore boiler rooms cold calling UK consumers and offering them shares in the firm (see Notes to Editors 2).
Some of the boiler rooms selling the worthless shares were: Ellis Capital Management; Fallon Brookes; Morgan Stern; Rothmans Capital; and International Consulting Services.
The €77,000 represents an interim payment, and the FSA is hoping to secure more through future actions. The FSA is currently aware of 20 victims of this particular scam but believes there may be others who have yet to contact the FSA and could be entitled to compensation.
"This is a good example of the FSA taking action against a company which was complicit in the promotion of its shares by boiler room fraudsters," Tracy McDermott, acting director of enforcement and financial crime at the FSA, said.
"In this instance, we have been able to recover assets for the benefit of victims, but this isn’t always the case. Normally, victims of share fraud don’t get any of their money back.
“We will use the full range of our civil, criminal and regulatory powers to deal with boiler rooms. This civil action is another success in our ongoing battle against unauthorised business and follows successful criminal prosecutions last year against four individuals for share fraud. Further criminal trials are planned.”
The FSA first took action against Monobank in August 2011 when it took steps to freeze its assets by obtaining an injunction from the High Court.
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