SIB acts against futures brokers: High Court tackles UK end of worldwide options scheme

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The Independent Online
THE Securities and Investments Board took out injunctions in the High Court yesterday to prevent a group of firms and individuals from carrying out investment business without authorisation.

Peter James West, a former employee of the London office of Bear Stearns International, the US investment bank, was one of those affected by the action. The SIB obtained an injunction in the High Court to prevent the Hong Kong company Overseas Clients Services conducting investment business without authorisation and making misleading statements or concealing material facts.

Barbara Dohmann QC, counsel for the SIB, said: 'It was a complicated scheme where clients believed that they were buying options on recognised exchanges, but instead got bets and mirror trades.

'The scheme operated like a can opener on their accounts. None of the individuals involved were authorised to do investment business.'

The scheme extended to China, Hong Kong and Spain. The SIB submitted that the Spanish investors in the scheme were ignorant of the full facts of the case.

In the same proceedings, Gresham Futures Ltd, of 84-86 Grays Inn Road, London, and Peter James West of Stonehealed Farm, Streat Lane, Brighton, gave the High Court undertakings that they would not conduct investment business without authorisation, make misleading statements or conceal material facts.

Peter West was until recently an employee of Bear Stearns International, the US investment bank, in its London office in Canada Square, Canary Wharf.

It is understood Mr West was employed as a futures broker. The Bear Stearns International operation in London employs about 200 people.

Patrick Mahon, compliance officer with Bear Stearns in London, said: 'Peter is an ex-employee of the firm. We are co-operating fully with the SIB enquiry. We have no further comment.'

In making orders against OCS, Mr Justice Lindsay said that there was evidence of a strong prima facie case of trading by OCS in breach of the Financial Services Act.

Paul Bingham, of 27a Ravenswood Park, Northwood, Middlesex, also gave an undertaking that he would not make misleading statements or conceal material facts.

Gresham, Mr West and Mr Bingham denied allegations of wrongdoing and dishonesty brought by the SIB.

The SIB's action was taken under section 6 and section 61 of the Financial Services Act 1986. The order against OCS lasts until 8 December.

'The undertakings given by the others last until trial of further order,' said the SIB.

OCS is registered at 701-2 Commercial House, 35 Queens Road, Central, Hong Kong.

Gresham's directors include Mr Bingham, Stephanie Hughes, wife of Mr West, and Peter Ruocco, a licensed bookmaker.