Man ran failed £8.5m spread betting scheme

Investors in an unregulated spread betting scheme have lost over £7m after its architect was given a bankruptcy restriction by Cardiff County Court.

Stuart Carl Mudge received £8.5m from investors in the Churchgate Trading Syndicate between June 2009 and February 2012.

In a judgement made public yesterday, it was revealed investors were promised ‘guaranteed’ returns of 15% every quarter and told their money would be used to trade spread bets.

Mudge, 61, from Newport, did not have authorisation from the Financial Conduct Authority (FCA) to run the syndicate.

The FCA received interim injunctions against Mudge in February 2012, freezing his assets and preventing him from operating the syndicate.

In a settlement reached in September 2013, he acknowledged he had broken the law.

He was then ordered to pay £7m to the investors.

Mr Mudge was made bankrupt after failing to pay any money to the FCA.

While other sums recovered by the FCA meant investors received a small return they suffered what was described as “substantial losses”.

After his bankruptcy was declared in December 2014, there were further investigations into his conduct.

In February this year, the County Court at Cardiff made a bankruptcy restrictions order against him for 12 years.

Ken Beasley, official receiver at the Insolvency Service, said: “This case is a prime example of the losses that can be incurred via an investment scheme that looks too good to be true. Investors lost over £7,000,000 and Mr Mudge will face severe financial restrictions lasting for 12 years.

“Bankruptcy restrictions orders and undertakings are central to protecting not only the bankruptcy process, but the people and organisations owed money who suffer financially from irresponsible or unscrupulous behaviour.”

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Investors are often lured by false promises of high returns without the high risks being disclosed to them. Spread betting on securities or currencies is typically risky and investors in Mr Mudge’s scheme ended up losing substantial amounts of money.

“We urge investors to be vigilant and wary of anyone promising high or guaranteed returns – these are often the hallmarks of a scam, even if the trader is someone you know. And check with the FCA Register to ensure the person is authorised to be advising or trading on behalf of customers”.

Mr Mudge’s period of bankruptcy restriction means that he cannot promote, manage, or be a director of a limited company until February 2029.

He also faces other restrictions.