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RHTLaw Taylor Wessing Deputy Head of Litigation & Dispute Resolution Nandakumar Renganathan interviewed by The Sunday Times on fraudulent investment schemes related to land-banking and gold buy-backs
The article was first published in The Sunday Times on 30 April 2017.
Title: A legal expert’s views on investments
Source: The Sunday Times © Singapore Press Holdings Ltd
Date: 30 April 2017
Here are some FAQs on fraudulent investment schemes posed by The Sunday Times to Mr Nandakumar Renganathan, deputy head of litigation and dispute resolution practice, RHTLaw Taylor Wessing.
A The strongest power that investors have is in deciding whether to invest in a product. People generally associate investments in gold and property as safe investments and, no doubt, companies which sell dubious products take advantage of this.
Often, investors are led to the investment by friends. They come into contact with agents of the company selling these products and are enticed to refer other friends to the investment through some benefits.
Investors gain confidence when their friends say: “I have put money into this investment and it gives me a 20 per cent return.”
The focus must be on the investment product, not the anticipated return. In my experience, things just go awry when investors focus on the return rather than what they are investing in.
A Investors should ask certain critical questions – what am I getting when I buy into this product?
For example, if I am informed this is a property in Brazil, the questions to be asked before one invests are:
After investors have made their inquiries, they should have an idea of risks involved in making the investment.
A The MAS has closed a gap in the law by introducing new regulations relating to land-banking here. These products will be dealt with as collective investment schemes. This means that the managers of such schemes will need to be licensed by the MAS.
These products need to be accompanied by prospectuses approved by the MAS. These measures seek to ensure that there is robust regulatory oversight on the managers (who have to be fit and proper persons). They also ensure that investors have access to all material facts to help them make informed decisions. In short, these ensure transparency and accountability in relation to the products being offered, as well as on the intermediaries offering the products.
A Investors can claim against the company and its officers if there has been fraud involved. They should approach their legal advisers and the authorities as soon as possible.
If the investors are quick enough, they may even be able to secure an injunction from the court to freeze the assets of the company. If the company has the money with it, chances of recovery are better.
One reality that investors should be aware of is that people who set up companies with a fraudulent purpose in mind plan ahead to move the money out as soon as they receive them. It becomes challenging to trace the money much later.
A The final question to be asked is “Is this too good to be true?” Investors should be wary of anyone saying you can double your money in three to four years. If they feel it is too good to be true, they should decline to invest.