The Fight against Financial Fraud continues

Commercial organisations have employed the principle of associating a celebrity with their products or services to inspire trust and confidence for decades. There has been a move away from the traditional use of famous faces which has been replaced with the rise of celebrity endorsement across social media. The ease with which celebrity endorsement campaigns on social media can reach the public and influence them has been recognised by financial fraudsters who have used this method of marketing to offer high-risk investments to deceive and cheat the public.

The Financial Conduct Association (FCA) estimates that investors in the UK have lost hundreds of thousands of pounds investing in contracts for difference (CFD) investments offered to them by fraudulent investment brokers via the use of unauthorised celebrity endorsement on social media.

Joanna Bailey an associate in the financial and banking litigation team commented “the fraudulent investment brokers do not have a presence in the UK but work out of Cyprus where they obtain regulatory status through the passporting rights between the FCA and the regulating body in Cyprus, Cyprus Securities and Exchange Commission (CySEC).” Joanna further remarked “the use of fake celebrity endorsement encourages people to trust the firms. Whilst the FCA has finally taken steps to stop such firms it does not give the investors their money back."

The FCA has removed the passporting rights from rogue investment brokers, this is the first time the FCA has used this option to prevent financial investment scams. The FCA’s Executive Director of Enforcement and Market Oversight, Mark Steward, confirmed the removal of passporting rights from the firms saying “The FCA has removed passporting rights for these firms which effectively stops them from continuing to provide these types of products in the UK. We welcome the further action taken by the CySEC. The FCA’s investigations into the sector are continuing.” Since the FCA's statement, Cysec has also fully removed all regulatory authorisations. The Italian re are unsuitable for novice investors as Contracts for Difference ("CFD") as they are high-risk. A number of individuals have lost in excess of £100,000 having been encouraged to take out credit to make the payments. A well-known practice that Giambrone’s financial and banking litigation team are very familiar with. A class action is an extremely effective way of demonstrating to a court that the many victims were subject to a scam. It immediately becomes clear that the rogue investment broker was repeatedly perpetuating the same deceit with the sole purpose of deceiving the victim and obtaining their money. 

For further information about Giambrone & Partners banking and fraud litigation team please click here