How does answering a cold call make this legal?
B.E.R. writes: I was cold called by Alexander George Limited to invest in the Osage 1 oil scheme. I declined. I wonder if your assessment of it would be the same as those you published last month on Parrish Eastway, a company that offers similar oil investments? THE Osage 1 Oklahoma oil wells investment scheme does exist, but as its bosses say, it is so speculative that legally it can only be offered to investors who understand all the risks.
I warned three weeks ago that Parrish Eastway Partners and its salesmen were breaking the law. The firm is not licensed by the Financial Conduct Authority and should not be cold calling people to take big risks with savings. The FCA appears to agree. On Thursday it warned: ‘This firm is not authorised by us but has been targeting people in the UK.’ The picture with Alexander George Limited is a bit different, but not enough to make me say you should invest.
The firm is a year old and run by Alex James Whipps, 27, who gives his address as Imperial House in Bromley, Kent. This was the registered office of investment firm Bordeaux Fine Wines – closed by the High Court last year. Whipps was an experienced salesman there. It was run by Kenneth Gundlach, who raked in £19million from the public but spent a lot of it on himself and staff, leaving a shortfall of £9million of investors’ money.
Paul Titherington of the Insolvency Service, which investigated, said: ‘It was Mr Gundlach and his salesmen who benefited from this company, rather than its honest investors.’ Whipps declined to comment on the wine scam. He said: ‘I was not what you would consider an integral part of the company.’
But Whipps makes the decisions at Alexander George. He said he got your details ‘from a third-party marketing company that specialises in providing optin and pre-qualified data’. He said ringing you out of the blue was not really a cold call because you must have expressed an interest in high-risk schemes.
This is unlikely. You are 71 and living on about £12,000 a year. You have received cold calls in the past offering high-risk deals, but you have never put in a penny. If answering a previous call is all it takes to keep Alexander George’s call on the right side of the FCA’s rules, then the rules need some attention.
The FCA is aware of Alexan- der George. Months ago it investigated calls it made promoting investment in Montana Leon, an unlisted gold mine enterprise.
Whipps confirmed this, saying again that another firm had provided details of people he believed were sophisticated investors. He added that ‘the matter has been dealt with compliantly on our side’.
The FCA agreed it had been in contact with Whipps, but refused to go into detail or confirm it knew about his previous sales activities. It issued a warning, not naming Alexander George, but stating the Montana Leon scheme was illegal.
Martin Finch, boss of Osage 1, said he was ‘astonished’ you had been approached. Alexander George had told him approaches were made to ‘individuals or company directors who have had exposure and previous interest in spread betting, CFDs and AIM market stocks’. Finch is open about the risks involved in the wells, but relies on sales firms to do the marketing. He is now reminding them of the legal limits on whom they can target.