Action Fraud, a division of The City of London police, has sent a stark warning to the public after a 28% rise in investment fraud was reported following the first coronavirus lockdown. Over 17,000 reports of investment fraud amounting to millions of pounds in losses were logged in the past year, with the months of May, June, July seeing the highest number. Regulatory authorities across the world battle against financial fraud but they are only as good as the "teeth" they are given.
Pauline Smith, head of Action Fraud, commented "The coronavirus outbreak sadly led to many people losing their job or having to manage on a lower income than they were used to...these factors provide criminals with the opportunity to attract more people with their fraudulent investment schemes"
This comes the day after The Chancellor of the Exchequer, Rishi Sunak, outlined the future for the UK's banking and financial services sector post-Brexit. The City of London has been the world's leading financial district for centuries from when the merchants first sailed up the Thames and later diversifying into banking from the Coffee houses. Rishi Sunak is fully aware that the UK's financial services industry's relationship with the EU is under question and pivots on regulatory harmony. Brussels will not grant access to its financial markets to non-EU countries unless their regulatory system is perceived to be similar to the EU regulations, known as equivalence.
Over the summer Britain submitted equivalence assessments in an attempt to ensure that the UK would be accepted and the City of London could maintain access to the EU markets. However, so far, there has been no confirmation of acceptance and the EU's commissioner stated that "...EU member states had not come to terms with Brussels' regulatory changes for the financial services sector..." It was further suggested that the UK may have to make a series of separate arrangements with each individual country.
Joanna Bailey, an associate heading the banking and finance team, commented "the Financial Conduct Agency (FCA) is often viewed as having a "light touch" regulatory framework and the prospect of having to negotiate separately with many of the EU Member States with no guarantee of acceptance will have an impact on at least two fronts. The City of London's much-envied position as largest and most dominant financial centre will be under threat and fragmented financial regulation will potentially open the door to even more frauds and scams possibly leaving victims with an even more complex and confusing route to compensation"
Giambrone's lawyers in the banking and financial team recognise that the key to overcoming the rising and ever-more complex financial frauds that are seen is robust and consistent regulation.
Joanna Bailey further commented "laxity in some of the Regulators is seen, not just in jurisdictions well known for "lip-service" regulation but increasingly in countries that are held to be reputable." Joanna further remarked "the Regulators' failure to act or investigate reports of fraud which then results in widespread losses for victims may require a legal challenge to those Regulators, the impact of which may focus the Regulators in regimes globally to take action sooner rather than later to prevent the often devastating consequences of fraud. Individuals must be vigilant and avoid being rushed into a "once in a lifetime investment" which almost certainly may prove to be a scam"
Giambrone's banking and financial team have extensive experience in assisting victims of Forex fraud and binary options fraud and have developed highly successful strategies to restore funds lost in fraudulent schemes; recently, having successfully obtained $150 million in a class action for the victims of a pyramid scheme. One of the most successful methods of demonstrating that an individual has been duped by a fraudulent investment scheme is to join a class action against the fraudsters. The evidence pointing to a repeated cycle of targeting, grooming and unwary inexperienced investors illustrates that the losses have not arisen due to the rise and fall of the markets but a cynical fraud designed to focus on novice investors.
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