A company whose CEO was jailed for misleading elderly and vulnerable people into making investments worth £2.7m has finally been dissolved.
The Royal Court officially turned the lights off at now-jailed Chris Byrne's firm, Lumiere Wealth Limited, yesterday morning, more than four years after it went into liquidation.
Advocate Rebecca McNulty made the application on behalf of the liquidators yesterday morning in the Royal Court, before Bailiff Timothy Le Cocq and Jurats Charles Blampied and Dr Gareth Hughes.
The Court heard that neither creditors nor the regulator had raised objections. The company will now be dissolved and the Registry informed.
Byrne was convicted of a total of 16 counts of financial misconduct. The offences involved practicing as an advisor when he wasn't authorised, providing false information to the regulator, and misleading his clients, which included a an elderly French couple, a pensioner and a retired teacher.
As well as jailing him for seven years in November 2018, the Royal Court also ruled that Byrne should be disqualified from managing a company for a period of 12 years.
Two years later, in autumn 2020, the JFSC published the conclusions of its investigation into Lumiere Wealth, finding that the Jersey-based financial services business had committed a serious catalogue of failures, breaching Jersey’s legal and regulatory regime.
Pictured: Christopher Byrne was jailed for seven years in November 2018.
Among other findings, the investigation concluded that Lumiere had routinely failed to consider its clients’ capacity to suffer financial loss and didn’t recognise, explore or resolve anomalies when assessing its clients’ appetite for investment risk. In short, it gave bad advice to clients.
It also failed to properly assess the fund, it gave the JFSC false and misleading information, it didn’t have adequate insurance, and it failed to identify or address several conflicts of interest, not least its close relationship to the fraudulent fund.
Announcing the findings of the investigation, Mr Moloney said: “The risk of fraudsters is constantly out there. I am very conscious that when they use a regulated business to defraud investors and deceive the regulator, by the time we catch them, investors’ money can be long gone. We need to be cautious; investors need to be cautious.
“As we would do after any case of this magnitude, our next step is to see if there is anything we could have done better. We are doing this as part of a wider update of all our processes for granting licences to businesses.”
Advocate Olaf Blakeley, who defended Byrne, said at the time that the case highlighted the current system was broken. He argued some of the pain for investors - who collectively lost £3m - could have been avoided if the JFSC required the financial advisory industry to have suitable professional indemnity insurance.
Pictured: Advocate Olaf Blakeley said the case highlighted the current system was broken.
“As the JFSC Director General has stated, by the time the JFSC catches up with wrong-doing, investors’ money can be long gone. This demonstrates the necessity for adequate professional indemnity insurance in the industry.
“Sadly, the system currently in place does not work and is not fit for purpose and an alternative is essential.
“This observation is nothing new as it was voiced 13 years ago by a Court of Appeal judge, Richard Southwell QC, in the Jersey case concerning Alternate Insurance Services Limited.
“The Royal Court said then: ‘The JFSC should consider with even more urgency what can be done to ensure that all those whom it regulates are fully insured in every respect. An alternative would be to establish a mutual scheme for insurance, such as some professions in England and Wales and elsewhere have long established.’
“13 years later, nothing has been done.”
But JFSC Director General Martin Moloney said that insurance cover only worked if advisors followed the rules.
“To meet our regulatory requirements, licensed businesses are required to secure adequate professional indemnity insurance, relative to their activities. The level of cover will vary from firm to firm."
Pictured: JFSC Director General Martin Moloney.
He continued: “However, as every jurisdiction recognises, there are limits to how much reliance can be placed on professional insurance to really protect investors.
“For example, for such insurance to remain valid there are ongoing obligations on the business. If the business acts in ways which don’t meet those obligations, an insurance company can legitimately refuse to pay after investors’ money is lost and claims are lodged.
“I have articulated publicly my personal view that the best way to provide additional protection for investors is through a proportionate investor compensation scheme.”
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