The SRA has repeated its warning to the profession about involvement in high-yield investment schemes.
A warning notice has been published telling solicitors about the risks of involvement in such schemes after a number of reports were received of law firms being linked to potentially fraudulent incidents where clients have lost substantial amounts of money. The warning reiterates a previous notice from September 2013, as well as a notice issued last year on allowing client accounts to be used as bank accounts.
Those operating dubious schemes seek the involvement of solicitors to give their scams an impression of credibility or security. Investors believe that because a scheme uses a law firm, and monies are paid through a law firm, it is a genuine investment and they will receive the returns they are promised.
Some schemes are also used by money launderers, with funds paid into client accounts by investors before being transferred to the operators.
SRA Chief Executive Paul Philip said: “The involvement of law firms in dubious investment schemes is not new. We have disciplined many solicitors because of this, and some have been prosecuted and imprisoned.
“This is not the first time we have warned the profession about such schemes. We will continue to deal quickly and decisively with any solicitor who becomes involved in them.
“Fraudsters have certainly paid attention to our warnings and adapted their schemes to avoid suspicion. Solicitors asked to use their client account, or any other account, for this purpose should be extremely careful. In normal circumstances, there is no good reason for investors to pay money to a law firm which could be paid direct to an investment company.
“Firms should also remember that, even if they are acting for an investment company, they have a duty not to take unfair advantage of others.”
The SRA are carrying out further analysis of cases involving solicitors and high-yield investment schemes in light of this increase in reports and have promised to share these insights, as well as issuing further information to highlight this risk directly to the public, in due course.
The warning notice can be seen here:
The notice from 2013 can be seen here:
The warning notice on allowing the client account to be used as a bank account can be seen here: