AgroEnergy go into administration after fraud investigation confirmed

Just a week after it was confirmed that the Serious Fraud Office would begin their investigation into the London firm Sustainable AgroEnergy, the company has formally entered administration. The company originally received a great deal of interest from Sipp investors after it made claims of large returns from Asian renewable biofuel crops.

However, the FSA has been concerned that the collective investment schemes it was offering the general public were unapproved and too widely available allowing the company to continue to get away with conducting business unsupervised by financial services within the UK.

Unapproved collective investment schemes, or Ucis schemes, are supposed to only be utilized by skilled investors that know the risks of placing an investment in one of these schemes. They often are based in countries other than the UK, and consist of illiquid market investments such as property or forestry.

Due to these facts, investors are usually not able to take their money back on the investment if needed and investors cannot seek any help through the Financial Ombudsman, FSA, or the Financial Services Compensation Scheme if something were to go sour. Therefore, they are not something that the general public should be investing in as they do not have the proper knowledge to ascertain if something is a viable risk or not.

Adam Samuel, a compliance consultant and lawyer, stated that the FSA is now working hard to fine companies that offer Ucis to general members to the public and is even looking into taking further action that may include banning them in order to help protect people.

Financial advisors however are concerned that this would be too drastic of a measure, because investors that do understand the high risks of the schemes should still be allowed to buy into them if they wish.