Last October I reviewed bonds offered by Symtomax, an unregulated cannabis investment scheme, which paid returns of 30% over two years.

At the time Symtomax’s bonds were being promoted by third party introducers on social media who claimed the investment offered “asset backed security” and was “Brexit proof”. I pointed out that like any individual corporate bond, the investment was in reality very high risk with an inherent possibility of 100% loss.

A number of comments were subsequently made underneath the article.

Last month Symtomax’s lawyers, Brett Wilson LLP, contacted me to complain about pretty much all the comments left under the article, as well as some minor discrepancies in the article itself. (The two discrepancies consisted of describing Symtomax’s director as a current rather than former regulatory official, and misattributing a Symtomax competitor’s market capacity to Symtomax itself, an error which came from one of Symtomax’s third party introducers.)

The law in the UK is very clear on the position when somebody complains about anonymous comments somebody else leaves on your website. To summarise, you contact the poster (if possible), and ask them to supply their real name and address to be passed to the complainant. If they demur or can’t be contacted, you remove the content at issue, or become legally responsible for it as if you posted it yourself.

All but one of the posters declined to provide their details and their comments were duly removed. The exception was a comment left by David Marchant, who runs the news website Offshore Alert from the USA, who stood by his comment and provided his full name and address.

This was duly provided to Brett Wilson LLP, who then proceeded to pursue their claim against Mr Marchant. Right?

Well, not if you inhabit the alternate legal reality of BW. They have given notice of their intent to sue me over Mr Marchant’s comment anyway, on the grounds that

1. it is not “reasonably practicable” to sue Mr Marchant in the USA
2. the US courts will not enforce a UK libel judgement in the US
3. the continuing presence of Mr Marchant’s comment, which mentions Symtomax directors by name, constitutes a violation of the General Data Protection Regulation.

Brett Wilson LLP have also demanded that I remove all content relating to the clients, despite my review being entirely factual, notwithstanding the minor corrections made. That Symtomax is a high risk investment scheme with an inherent risk of 100% loss is a matter of objective fact.

Brett Wilson describe themselves on their website as “a leading firm in defamation, privacy, harassment law, white-collar crime and regulatory/disciplinary work”. Yet they claim they are going to sue me because it’s too difficult to sue somebody in the United States. Right.

Nor does the GDPR change the fact that Mr Marchant remains responsible for his comment, having provided his full name and address so he can be sued over it. Any information I hold on Symtomax’s directors is in the public domain, as is the case for any director of an investment scheme promoted to the public.

Symtomax director banned

Symtomax director Minette Coetzee (formerly Minette Compson) has a complex CV.  In 2014 she was banned from working in the Gibraltarian financial services industry over the sale of some Scottish land to Advalorem Value Asset Fund, whose board Coetzee sat on.

Advalorem Value Asset Fund was shut down by the Gibraltar Financial Services Commission in 2014 “to protect the interest of participants and potential participants” and wound up. Brett Wilson LLP are at pains to point out that while Coetzee was found by the Supreme Court “to have failed to act with due skill, care and diligence”, she was not found to have acted dishonestly.

Coetzee was also governance and compliance director of Privilege Wealth, a supposedly “low risk” minibond scheme which collapsed in 2018.

Privilege Wealth achieved one of the most notorious legal victories for an unregulated investment scheme when it successfully sued David Marchant – that same David Marchant – in the UK over an article he published claiming Privilege Wealth was fraudulent.

Marchant declined to turn up in a UK court, relying on the fact that UK libel judgements are not enforceable in the US. The judge therefore awarded victory to Privilege Wealth – and had no choice in the matter. But the judge went further than simply awarding a walkover, endorsing Privilege Wealth as “clearly not a fraud”. Less than a year later Privilege Wealth collapsed and its administrators described it as a “possible Ponzi scheme”.

The damages awarded against Marchant and the costs incurred by Privilege’s lawyers (Lewis Silkin LLP in that case) remain unpaid, and are unlikely to ever be paid.

Perhaps Privilege Wealth’s (entirely hollow) victory over Marchant in a UK court has given Symtomax’s directors a misplaced sense of confidence that they can sue people willy-nilly in the UK and win. Who knows.

What happens next?

I don’t disclose my full identity on request, and for the same reason I don’t disclose it because somebody has made up a load of nonsense about it being impossible to sue people in the USA.

But that doesn’t mean I’m immune from responsibility and Symtomax do have the right to demand that I defend myself in court. As I have declined to voluntarily give up my identity, this involves Brett Wilson obtaining an “unmasking order” against me, also known as a “Norwich Pharmacal Order” after a famous legal case.

Brett Wilson’s expertise in Norwich Pharmacal Orders is there for all to see. When Googling “unmasking order”, the third result – effectively top after the ubiquitous Wikipedia and paywalled Thomson Reuters – is Brett Wilson’s helpful summary.

Which misspells “Norwich Pharmacal”. Twice.

Now, I don’t want to give the impression I’m being flippant about Symtomax’s right to take legal proceedings (judges don’t like it, being lawyers themselves) by laughing at unimportant typos. It just feels a bit like someone “sending the boys round”, and when the boys arrive on your doorstep they’ve got their shirts tucked into their underpants.

If I was the kind of person who’d cave in over a legal threat as flimsy as this one, Bond Review wouldn’t still be here after two and a bit years. If Symtomax insist on wasting their investors’ money on making me stand by my review, I will.

Watch this space…

Last week the Daily Mail reported on a company called “Zeux” which had taken out ads on London Underground trains for a cryptocurrency investment.

If you read Zeux’s adverts, you could be forgiven for thinking that the London Capital Finance collapse never happened. Zeux misleadingly compared its capital-at-risk investment with FSCS-backed deposits, and portrayed it as an easy-access savings account.

Losing interest in your bank? Earn 5% interest with Zeux

Best part? You can take your money out at any time.

Its website further claimed

Your funds are secured at all times by asset-backed portfolios of over collateralised loans. In addition this fund is secured by both WeCash and Zeux.’

(I have no idea whether Zeux is meant to be pronounced “zyeugh” as in French, “zay-ucks”, or “zooks”. So let’s just go with “zux”.)

While Zeux is regulated as a payment provider, the investment involves investors lending their money to Zeux, who uses the money to buy cryptocurrency, which it sends to a Chinese firm called WeCash, which then lends the money on to borrowers.

In other words, investors risk up to 100% loss if WeCash and Zeux run out of money, and its loans (which consist of loans of cryptocurrency to customers in China) are not valuable enough to repay investors.

The FCA has repeatedly confirmed, notably in its Second Supervisory Notice to London Capital and Finance shortly before its collapse, that it is misleading to compare the rates offered by capital-at-risk investments with those from FSCS-protected deposits.

In a Q&A with the Daily Mail, Zeux gibbered:

The economy is changing and UK consumers need to adapt if they want to achieve interest rates which are common in Asia or the US.

This fails to recognise that if you are willing to take some investment risk, a return of 5% per year can be reasonably hoped for from a diversified stockmarket portfolio, without going to the lengths of investing in Chinese cryptocurrency startups.

Interest rates from deposits may well be higher in Asian countries with higher inflation rates. Risk-free deposit rates in the US are at the same rock-bottom level as in the UK, so at this point Zeux appears to be throwing out random names of countries mixed with some FOMO.

In the final part of the Q&A, Zeux claimed

We’ve been in a dialogue with the FCA regarding the advertising, which has led to comments from them, which we have taken on-board and will continue to work and accommodate these comments in order to meet the FCA’s expectations and requirements.

Two days later the FCA hit back and revealed that, in fact, Zeux had given “a misleading impression of the conversations we have had with them”, and that Zeux had agreed to stop taking in new money and pull all its ads “including on their website, social media and public advertising on the transport network of the product in question”.

The adverts however remain up on the Tube. The FCA are said to be engaging with Transport for London on their timescale for removing Zeux’s misleading adverts.

From its wittering about “a dialogue”, Zeux seems to think the ban on taking new money in will be lifted at some point. Which would mean that as long as it can keep its ads circulating through London, it’s all gravy.

Abdication of responsibility by TfL

Transport for London meanwhile has disclaimed responsibility, saying “Ultimately, as with all advertising in the UK, it is the advertiser’s responsibility to ensure that their advertising meets the required standards”.

This is not good enough. We aren’t talking about pictures of women in bikinis trying to get you to join a gym. As we’ve seen far too often, the consequence of consumers falling for misleading ads and assuming “if the London Underground put the ads up it must be a safe investment” can be disastrous.

Would Transport for London run adverts for potentially dangerous pills on the basis that it’s the advertiser’s problem whether they comply with pharmaceutical regulations?

If Zeux had stopped paying their advertising bill, it’s a safe bet that it wouldn’t have taken more than a few days before TfL found the time to put temporary stickers over all their adverts until a new promotion could be sourced.

Unfortunately, TfL have done nothing wrong from a legal perspective and the regulatory system is designed to allow publishers of adverts to abdicate responsibility in this way, and take money for carrying misleading investment adverts for as long as the investment provider itself can get away with it.

Should I invest in Zeux?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any individual loan note to a small unlisted company, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

As an individual, illiquid security with a risk of total and permanent loss, Zeux’s product is much higher risk than a mainstream diversified stockmarket fund.

Before investing investors should ask themselves:

• How would I feel if the investment defaulted and I lost 100% of my money?
• Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
• Have I conducted due diligence to ensure the asset-backed security can be relied on?

If you are looking for a “secure investment” or “savings account alternative”, you should not invest in corporate loans with a risk of 100% loss.