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  • THE BARLOW CLOWES SCAM

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    Bik Ly
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    Barlow Clowes Ltd was established in 1973 and managed investments for 15 years before concerns were raised about its activities. In 1988, Barlow Clowes declared insolvency, having stolen over £100 million from investors through fraudulent practices. The scandal plunged 14,000 pensioners into poverty and cost the UK government £150 million to compensate victims. It revealed weaknesses in the regulatory system and demonstrated that high returns with low risk are usually too good to be true.

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    F04A Watermelons Business Scandal FSA 1

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    Barlow Clowes Ltd was established in 1973 and managed investments for 15 years before concerns were raised about its activities. In 1988, Barlow Clowes declared insolvency, having stolen over £100 million from investors through fraudulent practices. The scandal plunged 14,000 pensioners into poverty and cost the UK government £150 million to compensate victims. It revealed weaknesses in the regulatory system and demonstrated that high returns with low risk are usually too good to be true.

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    Download as PPTX, PDF, TXT or read online from Scribd
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    80 views6 pages

    THE BARLOW CLOWES SCAM

    Uploaded by

    Bik Ly
    Barlow Clowes Ltd was established in 1973 and managed investments for 15 years before concerns were raised about its activities. In 1988, Barlow Clowes declared insolvency, having stolen over £100 million from investors through fraudulent practices. The scandal plunged 14,000 pensioners into poverty and cost the UK government £150 million to compensate victims. It revealed weaknesses in the regulatory system and demonstrated that high returns with low risk are usually too good to be true.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 6

    THE BARLOW CLOWES SCANDAL

    Lecturer: Mr. Jun Group name: WATERMELONS Group members: 1- Nguyen Thi Bich Ly Tiny 2- Vu Huyen Trang Luna 3- Dao Kim Tuyen Sally 4- Pham Ngoc Minh Chau Candy

    F04A

    AUDITING AND FINANCIAL SYSTEMS

    Barlow Clowes History

    Barlow Clowes Ltd was established in 1973 by Peter Clowes (The "Barlow" was his early partner Elizabeth Barlow, who played no part in what was to follow). The business had been managing investments in gilts for 15 years In 1983 1984, The Department of Trade and Industry (DTI) concerned about Barlow dealing in securities without a license In May 1984, Warnings from Stock Exchange that Barlow would have difficulty in paying the high minimum rate of return offered without eating into capital and feared it might be pooling clients funds.

    In May 1988, Barlow Clowes declared insolvent

    How Peter Clowes stole investors funds


    Offered a fund: low-risk government giltedge stock higher yield (almost too good to be true)

    Transformed highly-taxed income into lowly-taxed capitals gains


    Claimed to produce a high income from low risk investment attract more investors Stole investors funds more than 100 million to fund a lavish lifestyle

    The Effects of Barlow Clowes Scandal

    Lack of supervision of the Department of Trade and Industry => investors thought it was a safe investment

    It plunged 14,000 pensioners into poverty due to the fraudulent practice of Barlow Clowes It cost the government 150m in compensation to thousands of mainly elderly investors on the basis of ex-gratia payments

    scheme

    Barlow Clowes was the first major financial scandal to hit Britains recently-formed regulatory system, set up to protect

    investors through the Financial Services Act 1986

    Lessons from the Barlow Clowes scandal


    When something looks too good to be true, it usually isnt true Do not assume that because the regulators have approved a business, it is a safe investment Do not invest into something you dont understand Beware offshore investments which are not covered by a statutory compensation scheme

    WATERMELONS GROUP
    THANK YOU FOR LISTENING!

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