FCA wins case against Capital Alternatives

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The Court of Appeal hearing took place on 27 and 28 January 2015. We will now await the judgment. The Court of Appeal did not give any indication as to when the judgment would be handed down.


In February 2014, High Court has ruled that two investment schemes, promoted by Capital Alternatives and a number of other firms, were collective investment schemes. They were promoted and operated without Financial Conduct Authority authorisation.   

The FCA launched legal action in July 2013 in respect of two investment schemes:

  • African Land (also known as Agri Capital) which offered investments in rice farm harvests in Sierra Leone as run by African Land Limited.
  • Reforestation Projects (also known as Capital Carbon Credits) which offered investments in carbon credits intended to be generated from land in Sierra Leone, Brazil and Australia and is run by Reforestation Projects Limited.

The defendants in the case had structured their schemes to try to avoid the need to be regulated by the FCA.  However, the High Court agreed with the FCA that the schemes were unauthorised collective investment schemes and could not be lawfully operated by the defendants.

Tracey McDermott, the FCA's director of enforcement and financial crime said:

"The FCA has an objective to protect consumers and enhance the integrity of the financial system. The Court’s ruling contributes to us achieving both. Collective investment schemes are complicated and investors put their money into the operator’s hands with no real control over what happens to their money. This ruling shows that even if operators have deliberately tried to structure their scheme to avoid regulation, the court will still look at whether those operating the scheme should in fact be regulated for consumer protection."

As the Court has ruled that these are collective investments schemes which the defendants were operating unlawfully it may order the defendants to pay compensation that can be passed on to the investors.

The Judge has granted leave to appeal on certain aspects of the judgment so the FCA will have to wait until any appeal hearing and its outcome. It can then proceed with any remaining aspects of the case which still need to be ruled on by the Court.

The FCA has explained to investors in each of the schemes that they do not need to take any action at this stage regarding the FCA’s case. At present, the previous undertakings and injunctions obtained by the FCA in July 2013 remain in place. Further information will be provided to affected investors when it is available.

Notes for editors

  1. View the full list of defendants in this case.
  2. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  3. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  4. Find out more information about the FCA.