Financial Conduct Authority v Capital Alternatives Limited & Others

The High Court has ruled that three carbon credit investment schemes (in Australia, Sierra Leone and the Amazon) and a rice farming scheme (in Sierra Leone) are each unauthorised collective investment schemes within the meaning of section 235 of the Financial Services and Markets Act 2000 (“FSMA”).

The Court found that such schemes were “managed as a whole” for the purposes of section 235(3)(b) of FSMA even if investors purchased a lease over an individual plot of land and received income based on the value of the carbon credits or rice produced by that plot of land.

The judgment is likely to be of wider significance and will need to be carefully considered by, for example, the promoters and operators of schemes that facilitate investment in hotel rooms, buy-to-let apartments, or commodities such as wine.

Permission to appeal to the Court of Appeal was granted.

Andrew Green QC and Paul Luckhurst acted for the Ninth to Eleventh Defendants.