The Financial Conduct Authority has closed an investigation into a property investment company which owed £134.7mn to investors in 2020.
The regulator has concluded there was no serious misconduct relating to Wellesley & Co.
The company entered into a company voluntary arrangement with its creditors in October 2020.
At the time around 12,000 investors were owed £134.7mm.
Around £80mn of this has been returned to investors but some investors have lost all that they invested.
The company, owned by the eighth Earl of Cowley, entered administration on April 30 this year.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “We sympathise with investors who have lost money through their dealings with the Wellesley Group, and recognise some investors suspect wrongdoing.
“We conducted a thorough, in-depth, forensic investigation to get to today’s outcome. During this investigation we examined thousands of lines of banking data, hundreds of pages of marketing materials, as well as evidence from over 300 investors.
“We identified that the risks were fairly explained to investors and did not find evidence suggesting the funds were misused.”
Wellesley & Co Ltd promoted and arranged high-risk investments relating to property development which were not covered by the Financial Services Compensation Scheme.
This company was responsible for approving financial promotions used to market certain products to investors and there were other unregulated companies within the Wellesley Group.
The FCA investigated Wellesley & Co Ltd, the only authorised entity in the Wellesley Group of companies, after concerns emerged through our supervision of the firm.
The regulator looked at marketing materials, risk warnings and statements to check whether the investments were described in a clear, fair and non-misleading way.
It found investors were clearly warned they could lose their money should they choose to invest, and that the products lacked FSCS coverage.
The company also warned investors about the risk of insolvency regarding the Wellesley companies and the underlying borrowers.
The investigation reviewed more than 30,000 banking transactions and the financial statements of Wellesley Group Investors Limited between January 2017 to April 2021.
No evidence was identified to suggest that investor funds had been defrauded or otherwise misused.
tara.o’connor@ft.com
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