The 37 private investors, whose brokers said they had together paid a total of just over pounds 2m for Clerical Medical products, issued a writ in the High Court last month. Christopher Mitchell-Heggs, a Paris-based British lawyer acting on behalf of the investors, confirmed that a writ had been served.
The amounts in contention relate to investments made through an agent representing the company in France.
'As the single market was coming up, we were naturally looking for a British company in which to invest because of British companies' reputation for stability,' said Jean-Claude Courteix, a Toulon broker. He said he had invested money on behalf of clients and of his own family.
Jean-Claude Peizerat, a broker in Saint Laurent du Var, near Nice, said he had sold Clerical Medical products to about 100 clients before any problems emerged. Twelve of Mr Peizerat's clients are among the 37 plaintiffs.
According to the brokers' accounts, Clerical Medical directed all inquiries about its products for would-be French investors to a master agent, Dan Bernigaud Hawk, a US national, who handled Clerical Medical business through various companies such as The Hawk Family Financial Ltd of the Isle of Man or CMI Hawk Resources SA of Luxembourg.
Mr Courteix said the investors received policy document numbers shortly after their cheques were addressed to the agent. Last October, however, they became anxious when newspapers said Mr Hawk had been detained by police in Monaco. He was released three months ago and was never charged with any offence.
At that time the investors and their brokers asked for clarification from Clerical Medical and were told none of the money deposited by the 37 had reached the company. Nigel Gardner, Clerical Medical's financial director at the time, wrote to the clients assuring them that their funds would nevertheless be safe, Mr Courteix claimed. Since then, however, all attempts to obtain reimbursement had failed.
The writ was served against a total of seven defendants, including Mr Hawk, his companies and Clerical Medical in London, the brokers said.