An unregulated company is posing as NYSE-listed alternative asset manager Kohlberg Kravis Roberts (KKR) in order to win business, according to the UK regulator, the Financial Conduct Authority (FCA).
The phony firm is believed to be using the KKR brand to market share-dealing services to UK consumers; the FCA stated on behalf of the firm that KKR does not offer such services to retail investors.
KKR became aware of the scam when a concerned investor notified the firm about being approached by someone claiming to represent KKR, according to Mark Howard, head of compliance for KKR’s financial services team.
The FCA then reached out to the firm after it was alerted by a wary investor with a similar story, said Howard.
KKR has alerted staff and investors to the scam. But other than sending out an alert with the FCA, there appears to be little left for the firm to do in stopping its impostor.
“The phone numbers they [the phony firm] supplied do not go through to anyone and we are sending a notification for them to stop trading; but I don’t think there is anyone at the address so I think we have got our hands tied to a degree,” said Howard.
One UK-based financial services lawyer agreed that there is little KKR can do to immediately stop the rogue firm from marketing. He added there is a legal remedy known as “passing off” which aims to prevent someone from misrepresenting his/her goods or services as being the goods of someone else; but actually tracking down who is doing it is a “tough assignment.”
The FCA urged investors to use the Financial Services Register to check whether a company or individual is authorised. The register keeps a list of FCA authorised firms and their regulated activities.
Investors in unregistered entities have fewer forms of investor protection available to them, such as the UK’s Financial Ombudsman Service, which sorts out complaints between consumers and financial businesses, or the Financial Services Compensation Scheme, which is a fund of last resort for customers of authorised financial services firms. The fund may pay compensation if a firm is unable to pay claims against it, usually because the firm has stopped trading or defaulted.