29 year directorship ban for financial services professionals who mishandled investors’ money
Kathryn Joy Clark and Richard Aston Clay, officers of three financial services firms - based in Nottingham, have been disqualified from acting in the management of a company for a combined 29 years for mishandling over £7m of investment funds.
The disqualifications follow an investigation by the Insolvency Service.
Ms Clark (52) and Mr Clay (50) were officers of Arck LLP (Arck), HD Administrators LLP (HDA) and Joyston Alternative Assets (No 4) Ltd (Joyston 4).
Kathryn Joy Clark, as partner of HDA and director of Joyston 4, did not dispute the misconduct alleged, and gave an undertaking to the Secretary of State for Business, Innovation and Skills not to be involved in the management of a company for 14 years in April 2014. The disqualification period took effect from 6 May 2014.
Richard Aston Clay, as partner of Arck and director of Joyston 4, chose not to respond to the allegations made against him, and was disqualified in the High Court for 15 years, the maximum period allowed under the Directors Disqualification legislation. The disqualification took effect from 29 December 2014.
HDA operated a Self Invested Pension Plan called HDSIPP, for which it was authorised and regulated by the FCA. HDA also collected and held funds on behalf of connected companies, earmarked for future investment, and represented itself to also be regulated in this area, which it was not.
One of the investment companies was Joyston 4, into which almost £9 million was invested and held by HDA in a nominated bank account. HDA transferred more than £7.2 million out of the account against the terms under which it was being held. The vast majority of that money is irrecoverable.
HDA was wound up by the Court on 14 June 2012, and Joyston 4 was placed into Administration on 3 May 2012.
Arck received investment money from individuals hoping to benefit from property development, but dissipated this money without any development being undertaken. Bank statements were falsified on two separate occasions to suggest that there was more than £12 million in its bank account, when the reality was there was just £25. The vast majority of the money is irrecoverable. Arck was wound up by the Court on 11 April 2012, and claims have been made in the liquidation valued at more than £63 million.
Commenting on the disqualification, Official Receiver Ken Beasley said:
Mr Clay and Ms Clark caused significant loss to members of the public by using investment money without the knowledge or consent of those investors. In doing so, their conduct fell far below expectations given the level of trust placed in them as financial professionals.
By obtaining lengthy disqualifications, the Insolvency Service has shown that such conduct by directors will not be tolerated. Tough action will be taken to put a stop to companies trading against the public interest and we will seek to remove culpable directors from the business environment.
The investigation into Joyston 4 showed that:
- Mr Clay and Ms Clark caused or allowed potential investors into Joyston 4 to be misled by representing that HDA, as the guardian of the investment funds, was authorised by the FCA to hold funds for that purpose
- Mr Clay and Ms Clark caused or allowed Joyston 4 to make payments to connected companies, for which no security or benefit was received, amounting to £6.6 million, in the knowledge that no such dissipation of funds was allowed according to the terms under which it was deposited by investors
- Mr Clay caused or allowed Joyston 4 to make purchases of US Life Assurance Policies amounting to £502,555 and make premium payments of £33,325, in the knowledge that no such dissipation of funds was allowed according to the terms under which it was deposited by investors
The investigation into Arck LLP showed that:
- Ms Clark and Mr Clay caused or allowed false representations to be made in July 2011 by forwarding a false bank statement by email which they knew or ought to have known would be relied upon by a financial advisor. That bank statement suggested that the balance of an Arck bank account as at 01 June 2011 was £12.2 million, whereas the true balance was just £25
- Ms Clark and Mr Clay caused or allowed false representations to be made in November 2011 by forwarding a false bank statement by email which they knew or ought to have known would be relied upon by a financial advisor. That bank statement suggested that the balance of an Arck bank account as at 30 September 2011 was £13.75 million, whereas the true balance was just £25
The investigation into HDA showed that Ms Clark caused the removal of funds from bank accounts controlled by HDA on behalf of connected companies in direct contravention of the strict controls under which those funds had been deposited. £7.2 million was removed from the bank account relating to Joyston 4, and £1.7 million was removed from two further investment accounts.
Notes to editors
Kathryn Joy Clark is of Nottingham and her date of birth is 20 September 1962.
Richard Aston Clay is of Nottinghamshire and his date of birth is 18 December 1964.
Arck LLP (CRO No. OC321235) was incorporated as a limited liability company on 28 July 2006. From 2007, its registered office was Westgate House, 3 The Triangle, NG2 Business Park, Enterprise Way, Nottingham NG2 1AE, which was also its trading address.
Arck LLP promoted unregulated investments, receiving finance directly from private individuals and from loans made by various connected companies, for onward investment in development opportunities around the world.
On 7 February 2012, a petition to wind up Arck LLP was presented to the court by a group of creditors. The following day, Roderick Graham Butcher of Butcher Woods, based in Birmingham was appointed as Provisional Liquidator.
Arck LLP was wound up by the Court on 11 April 2012, and the Official Receiver in the Public Interest unit in Manchester was appointed liquidator. At a meeting of creditors held on 19 June 2012, Mr Butcher, and Richard Paul Rendle of Rendle & Co, based in Solihull, were appointed joint liquidators.
Joyston Alternative Assets (No 4) Limited (CRO. No. 07340770) was incorporated as a limited liability company on 28 July 2006. From 2007, its registered office was Westgate House, 3 The Triangle, NG2 Business Park, Enterprise Way, Nottingham NG2 1AE, which was also its trading address.
On 3 May 2012, Joyston (Alternative Assets) No 4 Limited was placed into administration. The joint administrators are Tyrone Shaun Courtman and Nicholas John Edwards of Cooper Parry, based in Nottingham.
HD Administrators LLP was incorporated as a limited liability company on 01 December 2006. HDA was authorised by the FCA to ‘establish, operate and wind up personal pension schemes’ from 26 April 2007. From July 2008 its registered office was Westgate House, 3 The Triangle, NG2 Business Park, Enterprise Way, Nottingham NG2 1AE, which was also its trading address.
On 14 June 2012, HD Administrators LLP was placed into liquidation and the Official Receiver in the Public Interest unit in Manchester was appointed liquidator.
A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:
- act as a director of a company
- take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
- be a receiver of a company’s property
In addition that person cannot act as an insolvency practitioner and there are many other restrictions are placed on disqualified directors by other regulations. Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.
Further information on director disqualifications and restrictions is available.
The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice. Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.
Published: 3 March 2015
From: The Insolvency Service