The UK Financial Conduct Authority has banned former Vector Wealth chief executive Jeffrey Dawkins from regulated financial services. It also fined him nearly £270,000. The regulator found that he dishonestly acted as a front for a disqualified director who used the firm's authorised status to sell high-risk bonds. Investors are expected to lose about £4 million.
Dawkins sold Vector Wealth in 2019 to a disqualified director who presented himself as its chief executive, according to the FCA. Dawkins nevertheless told the regulator that he remained in charge. The authority said this deception let the director market mini-bonds under the apparent legitimacy of an authorised firm. Vector Wealth later entered administration in April 2022.
AUTHORISED STATUS MASKED HIGH-RISK BONDS
The FCA said the disqualified director and former senior manager Kadir Kanizi promoted the bonds without properly warning investors about the risks. Investors contributed £105,000 on average, while the largest individual investment was £1.1 million. Purchasers had to identify themselves as high-net-worth or sophisticated investors before seeing the marketing material.
The authority also banned Kanizi from senior management roles. It calculated an £80,096 penalty but reduced it to £20,000 after assessing financial hardship, and agreed not to enforce that amount if equivalent funds were made available to Vector Wealth's liquidators. Dawkins was separately ordered to repay proceeds he received from selling the firm and continuing to act as a director and approved person.
COMPENSATION REMAINS UNCERTAIN
The Financial Services Compensation Scheme says it is investigating whether Vector Wealth provided regulated investment services that meet its conditions for compensation. It has warned that issuing a company's own mini-bonds is not itself normally a regulated activity. Compensation therefore may not follow solely from the firm's failure to repay the bonds.
Investors must now follow updates from Vector Wealth's liquidators and the compensation scheme as claims are assessed. The FCA said people approached about loan notes or mini-bonds should check the firm and understand that they can lose all their money. The next practical milestone will be any determination by the compensation scheme or distribution proposal from the liquidation process.