The FCA has banned Jeffrey Dawkins, former chief executive of Vector Wealth Ltd, after he dishonestly acted as a front for a disqualified director, using the company to sell high-risk mini-bonds.
Mr Dawkins has also been fined nearly £270,000, including an uplift for failing to cooperate with the FCA’s investigation.
He has also been ordered to pay £68,257 of the proceeds he received from selling Vector Wealth.
In 2019, Mr Dawkins sold Vector Wealth to a disqualified director who described himself as CEO and wanted to use Vector Wealth’s FCA-authorised status to sell mini-bonds.
Mr Dawkins told the FCA he was still in charge, but the new “CEO” was really running the firm. This deception allowed the disqualified director to promote mini-bonds using the legitimacy of the firm to make them appear safer than they were.
The disqualified director and Kadir Kanizi, a former senior manager at Vector Wealth, promoted the bonds but investors were not properly warned about the risks.
Investors put in £105,000 on average, with one investing £1.1m. Before seeing the marketing material, they had to confirm they were high net worth or sophisticated investors.
Investors are expected to lose about £4m from the deception.
The FCA has banned Mr Kanizi from senior management roles. He was fined for failing to make sure consumers were properly warned about the risks.
Therese Chambers, executive director of enforcement and market oversight at the FCA, said: “Jeffrey Dawkins acted as a front man for a banned director, helping high-risk investments look safer than they were.
“Mr Dawkins and Mr Kanizi allowed misleading promotions to draw in investors, many of whom now face significant losses. Mini-bonds and similar investments are very high risk, and people should be extremely cautious.”
Vector Wealth entered administration in 2022 after an application to the High Court by a director of the firm to wind up the business.
Despite the firm entering administration the Financial Services Compensation Scheme is unlikely to be able to pay compensation based purely on Vector Wealth’s failure to repay the bonds, as issuing bonds is not normally a regulated activity.
The FSCS says it is investigating if there were investment services provided by Vector Wealth in relation to these investments that are regulated and meet the qualifying conditions for compensation. It continues to work with the administrators of the firm, MHA MacIntyre Hudson.