£50m Apex Algorithms claim doesn’t add up
Probes a world of scams and scandals
C.H. writes: I have received an email from ADVFN that offers an investment bond yielding 16 per cent a year. The bond is from a company called Apex Algorithms that has been managing funds for at least seven years. The investment looks safe as it is secured against assets, just like a mortgage, but this leaves me wondering why the yield is as high as 16 per cent. Have you heard anything about this? THERE is no such company as Apex Algorithms. Its proper title is Apex Incorporated Limited and it is based in Deal, Kent. The fact this is not immediately clear does not inspire confidence, but there are far bigger questions over this offer.
Apex is trying to raise £50 million through the offer of a corporate bond with a minimum investment of £5,000. It says: ‘Receive gross interest of 16 per cent per annum, in regular quarterly payments.’
Reassuringly, it adds: ‘Our performance shows positive return on investment for investors for seven years. We employ highly experienced financial services and financial marketing professionals who possess a number of finance professional qualifications, and have extensive contacts throughout the global financial services industry.’
Here is the first question. Apex did not exist before July 2013, making it just four and a half years old, so how can it have been managing investments for seven years?
A bigger worry is that Apex says it may market the corporate bond from now until 2021. If it fails to rake in £50 million, it will simply return investors’ capital. But what happens if Apex goes bust in the meantime? Is the capital ringfenced? Are there independent trustees to safeguard it? Or would investors’ cash sink along with the company?
The claim that funds are secured by assets is false. Small print in Apex’s marketing material reveals that investors’ cash is unsecured. If the company goes into liquidation, investors will be in a queue for whatever scraps are left.
As for exactly how Apex hopes to make a profit, it says: ‘Our team now deploys its expert knowledge to invest in other growth sports companies.’
But when you get down to the nitty gritty all the signs are it places bets on football matches and other sporting events. I asked Apex’s sole director Nathan Burgoyne about the safety of investors’ funds.
I invited him to name the ex-City workers and professional finance figures he employs. I also enquired how his company’s track record could go back to before it existed. He told me: ‘We maintain separate accounts to protect clients’ funds.’ But he did not say who controls these accounts. He failed to name anyone in the business apart from himself. And as for the seven-year track record, he explained that ‘the founding members traded privately’.
Since Burgoyne is 27 years old, he must have been an impressive 20-year-old. I did wonder if Apex’s bond, and its claim to operate as a syndicate, might bring it under the watch of the Financial Conduct Authority.
Burgoyne told me there had been ‘ an informal dialogue’ with the regulator. He believes he is outside the watchdog’s scope because his scheme is only aimed at sophisticated investors and high net worth individuals, though there is no mention of this in his emails or promotional brochure.
The regulator did not respond to invitations to comment. Nor did ADVFN which is a genuine financial news service.
Burgoyne told me: ‘ We have reviewed agents who market Apex and its products and have stopped working with them.’ He added that ‘it personally hurts us’ to be faced with the questions I posed.
But this cannot be as much as the pain Burgoyne inflicted three years ago when he hit a man walking his dog in Folkestone with his BMW sports car. Andrew Lawrence, then 52, suffered multiple injuries. His dog had to be put down.
At Canterbury Crown Court, Burgoyne was told off by the judge for laughing. He was convicted of careless driving, fined £5,000 and banned from driving for eight months.
Accompanying him to court was his brother Daniel who was jailed for two years in 2015 for running a carbon credits investment fraud.
At his trial in March last year, Nathan Burgoyne was described as a self-employed marketing representative. I wonder why he did not tell the court about his successful investment firm Apex Algorithms and his long record of making a fortune for investors? Perhaps I can guess the answer to that.