Secured Energy Bonds collapse: Claims against Financial Advisers and Promoters
17th July, 2015
Investors in Secured Energy Bonds may be at risk of losing money as the scheme, which promised a 6.5% annual return, has now gone into administration.
Almost one thousand people invested in Secured Energy Bonds, a mini-bond that promised a 6.5% annual return.
The bond, on the face of it, was attractive as it promised a high return in an otherwise low yield environment. The bonds promised ‘sustainable and predictable’ investments.
Unlike a usual corporate bond, mini-bonds are not generally rated by credit-reference agencies.
Mini-bonds are unregulated and ineligible for the Financial Services Compensation Scheme, which leaves investors vulnerable if the issuing company collapses, which is what happened in this case.
Investors placed a combined total of £7.5 million into Secured Energy Bonds, but stopped receiving interest payments in January, when Secured Energy Bond PLC was placed into administration.
As these bonds are unregulated, the prospect of investors recovering their money is bleak. It now appears that 20% of the investments – a total of £1.5 million – was spent on launch costs, whilst much of the remaining funds were transferred to a parent company, CBD Energy Limited, domiciled in Australia.
The bonds were secured against the assets of the UK subsidiary company and not the parent company.
Legal advice should be sought if you have found yourself a victim of this collapse.
Martin Woodford, Partner in the Commercial Litigation unit at Ward Hadaway and a specialist in financial services disputes, said: “These mini-bonds ought to have come with appropriate health warnings and, even then, they may have simply been unsuitable for many retail investors. It may well be that a retail customer may have a claim against his or her financial adviser.
“Further, there are serious questions to be asked as regards the promotion of these mini-bonds and the issuing company of these bonds.
“Financial advisers who advised retain customers to purchase these bonds and who are facing claims will wish to look at the information that was provided to them upon which their advice was based.”
Martin and his colleague, Joe Kelley, regularly act in cases similar to this and have recovered millions on behalf of disappointed investors.
They also act on behalf of IFAs who find themselves under fire because of failed investments, so are well-placed to advise on these matters.
If you wish to speak with Martin or Joe in respect of this or any other claim please contact them on (0191) 2044428, martin.woodford@wardhadaway.com or (0191) 204 4295, joe.kelley@wardhadaway.com respectively
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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