Spread-betting syndicate operator faces 12-year ban
Syndicate owner Stuart Mudge's ban is a lesson to never trust your money in unregulated schemes.
Cardiff County Court has banned syndicate owner Stuart Mudge from being involved in promoting, managing or being a director of a limited company until February 2029, reportsMoney Marketing.
Mudge ran a spread-betting syndicate between June 2009 and February 2012. The scheme, known as Churchgate Trading Syndicate, which was run without FCA permission, promised investors that it would use spread bets to generate guaranteed returns to investors as high as 15% every quarter.
Unsurprisingly, these returns didn't materialise. Instead, Mudge kept it going by paying investors interest out of the group's capital. This produced the illusion that it was generating a constant stream of trading profits, even though it was actually losing money from its spread bets. This type of scam is known as a Ponzi scheme.
Four years ago, a court ordered him to repay £7m of investors' money, finding that he did not have the required FCA permission to set up the scheme. However, since Mudge was unable to repay it, he simply declared bankruptcy.
The lesson here is never to trust your money in unregulated schemes. And if someone offers you huge guaranteed returns way in excess of the amount that you would normally expect from stocks, then it's almost certainly a scam. After all, if they had come up with a way to make a risk-free 15% every three months, they would either exploit it themselves or raise money from institutional investors, rather than seeking funds from ordinary investors.