LONDON (Reuters) - Britain's markets watchdog on Tuesday warned investors in Argento Wealth Limited, a now-insolvent unauthorised investment scheme, that they faced "very significant losses".
The Financial Conduct Authority (FCA) started legal proceedings in London's High Court against Argento Wealth and its sole director Daniel Willis last year, saying it wanted to recover funds "for victims of the firm's unlawful activity".
The FCA alleges the firm illicitly took 2.8 million pounds ($3.4 million) as deposits, arranged $9 million of investments unlawfully and breached restrictions on financial promotion.
Argento Wealth and Willis did not immediately respond to a request for comment.
The FCA said there was no credible evidence that the firm could repay the funds borrowed from retail investors and a Cayman Islands-regulated fund, EMB Fund Ltd, and that Argento Wealth was therefore insolvent.
It said it had secured effective interim freezing orders on Argento Wealth and Willis's remaining assets in an attempt to protect any remaining investor funds.
"Despite this, investors who lent money to AWL are likely to suffer very significant losses. Exact figures cannot be given at present, but AWL’s remaining assets appear to be far below what would be required to return all investors’ money," the FCA said.
EMB Fund said in a statement published on its website last June that it had suspended separate legal proceedings in the Cayman Islands after learning of the FCA claim and has said since that it has tried to engage with the regulator.
The fund did not immediately respond to a request for comment.
Argento Wealth is not an FCA authorised firm, so bruised investors cannot turn to the financial ombudsman or Financial Services Compensation Scheme for compensation.
($1 = 0.8338 pounds)
(Reporting by Kirstin Ridley, Editing by Kylie MacLellan)