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Friday 21 September 2012

The Wine Investment Association: important to get it right

Gates@Château Latour
There have been several recent reports in the press about an autumn launch of the Wine Investment Association.

Leading companies in the wine investment industry are looking to set up a regulatory body to combat an influx of bogus sellers and prevent company collapses.
In the past two years, 50 wine investment companies have collapsed, potentially costing investors thousands, while the market has been beset with firms looking to capitalise on buyers' ignorance by selling wine at inflated prices.
Peter Shakeshaft, the founder of Vin-X is behind the new body and says he and other major players are looking for all firms to comply with a new code of practice that should be in place by the autumn.’
Independent, 8 July 2012

Vin-X along with a number of committed companies are moving forward rapidly to forming a self-regulatory body and look forward to publishing its charter in the Autumn…
We want an industry that is transparent, safe and open to everyone, not just High Net Worth individuals, the investor's risk should be limited to the individual wine and the market performance and not to the integrity and professionalism of the agent they deal with.’
Peter Shakeshaft: Huffington Post, 5 September 2012

Shakeshaft said his firm had joined forces with five others to create the Wine Investment Association, a regulatory body with the aim of safeguarding private investors. It is due to launch in the autumn.’
Harpers, 7 September 12

Four UK wine investment companies – Albany Portfolio Management, Vin-X, Provenance Wines and Culver Street – are set to launch the UmmK’s first ever Wine Investment Association. According to Albany’s David Jackson. ‘The WIA will have a number of aims, most importantly to protect investors from bogus sellers and company collapses.’’
Decanter, October 2012

Handled properly this new initiative could be an important step in reducing the current pandemic of dubious wine investment companies as well as the outright bogus ones. The initiative is not as far advanced as these reports might indicate. The proposals for this putative body are now with lawyers and, as yet, there is no signed agreement between the four companies. It looks like an ‘autumn launch’ may be a fairly elastic timescale. 

Although moves towards regulation are welcome I think there are a number of conditions that have to be fulfilled if it is going to gain the confidence of the fine wine trade and, most importantly, that of investors. If WIA is to be a success it will need widespread support. These conditions should include:

a. The association should be fully independent of the companies concerned
b.  The criteria for membership should be rigorous.
c. Suitability for membership should be independently verified including membership for the founding companies.
d. If the WIA is to attract other members from the fine wine sector the proposals will need to go out for consultation once they have been framed and before the organisation is launched.
e.  Once the proposals have been framed and before it is launched, the WIA should go out for consultation to ensure feedback from the fine wine trade and to attract additional members.
f.  The aim has to be transparency. This should apply not only to the process of buying but to the companies involved, their directors and those responsible for giving investment advice.

The WIA urgently needs an agreed message and a single spokesperson responsible for putting over that message. Unless this done soon, there is a real danger that the credibility of the initiative will be seriously compromised even before the association's proposals have been agreed.

To date those setting up the WIA have not been circumspect in the choice of people speaking on its behalf. Any spokesperson for the WIA must expect rigorous media scrutiny - both from the wine press and the wider media. The past histories of David Jackson (a director of Albany Portfolio Management Ltd) and Peter Shakeshaft (the director of Vin-X Ltd) and are likely to undermine confidence the WIA initiative for the following reasons:

David Jackson
Jackson was the general manager of Goldman Williams Ltd (a wine investment company closed in the public interest January 2002). He was then a founder and director of Bordelais & Dutch (another wine investment company closed in the public interest in January 2003). In 2005 he was working for Stephen Cleeve's European Land Sales Partnership - a land banking scam. In addition to extensive land banking Cleeve has been involved in multiple other investment scams - barrels of whisky, Champagne for the millennium, and pipes of ruby Port. Cleeve served an eight-year term as a banned director. Jackson says he didn't know Cleeve but minimal due diligence would have plenty of information on Cleeve's 'colourful' career.

Jackson assures me that he has changed. Certainly I have not received any complaints about Albany Portfolio Management Ltd. It was, however, disappointing to discover that Jackson had photos of his time with Goldman Williams on his Facebook (removed only last week). This may suggest that he is still not fully aware of the offense caused by the images of the Goldman telesales staff out on the town celebrating fuelled by commissions gained by duping investors.

Peter Shakeshaft
Shakeshaft was CEO of Wills & Co Financial Group plc, the unregulated holding company for Wills & Co Stockbrokers Ltd. Wills & Co Ltd was described by Tony Hetherington in The Mail on Sunday (6.11.2011) thus: ‘Wills & Co were as dodgy as they come.’   

In October 2007 the company was fined £49,000 by the FSA for the misselling of high-risk securities to private clients and required to rectify these failings. Following an inspection by the FSA in May 2008 the authority concluded that Wills & Co had not taken adequate and appropriate steps to address the failings. The company was referred to the Enforcement Division of the FSA and in December 2009 its license to advise clients on securities was withdrawn because of evidence of continued misselling. Wills & Co was then wound down and finally wound up in the High Court in July 2011.

Although Shakeshaft was not a director of Wills & Co Ltd during the time of the misselling identified by the FSA he was CEO of the holding company and had a responsibility to ensure that the required remedial action was put in place and that the misselling ceased even if financial rules prevented him from knowing all the details.

Shakeshaft, who a director of Wills & Co from August 2010 to May 2011 explains:
‘I became a director only after the trading had ceased and it was in administration.  I did that because firstly I wanted to ensure all the clients had what they were entitled to. (I again confirm that every share cert and every penny was accounted for) but also it was important to me to demonstrate to the outside world that even though this catastrophic event had occurred I was prepared to take responsibility and conduct an orderly wind down of the business.’
Darren Lansdown, a director of both Wills & Co Stockbrokers Ltd and Wills & Co Stockbrokers Ltd, was censured by the FSA in February 2010: ( Although not a director of Vin-X Ltd, he is described as an associate director of the company.  


The Wine & Spirit Trade Association (WSTA) guidance for wine investors has been criticised for lacking teeth. This is to misunderstand its purpose. The WSTA is not regulatory body and its wine investment site is designed solely to give advice and warn investors against shady practice.

Sunday 16 September 2012

Vintage Wine Investors offer '50% profit on 2010 Lafite' – but who are they?

Château Lafite

Vintage Wine Investors are generously offering to make investors a 50% profit in just three months on a purchase of a case of six bottles of 2010 Lafite. Buy a case now for £3000 and Vintage Wine Investors will give you 'a legally binding Wine Sale and Buy Back agreement that confirms that £4500 will be transferred to your account on 21st December 2012 for each case of 6 bottles that you purchase'. A maximium of 10 cases per client.

In response to the reasonable question 'How can we make such an offer' Vintage Wine Investors claim that 'This is from a very large buy from a liquidation sale. We are putting in half the money ourselves and allowing new clients to test the market and see the short term returns that are currently available.'

Sounds too good to be true? Before reaching for your cheque book consider the following:

a) The 2010 Lafite has yet to be bottled and shipped.
b) The lowest price for a case of six bottles of Lafite 2010 as shown on wine-searcher is £4150 from En Primeur Ltd. En Primeur Ltd were offering this for £4400 on 15th June 2012. This would suggest that the market is less buoyant than Vintage Wine Investors believe. 
c) There is no indication on their website of the provenance of this company – no names of directors etc.. The company appears not to be a registered UK company – no records at Companies House. 
d) Their address at 17 Ensign House, Admirals Way Canary Wharf London E14 9XQ appears to be a virtual office run by Flexy Office (UK) Ltd. Vintage Wine Investors could actually be based anywhere – Bromley or the Costa del Sol, for instance. 
e) They also give 111 Buckingham Palace Road, London SW1W 0SR – another serviced office – as a further address. 

f) If Vintage Wine Investors 'legally binding Wine Sale and Buy Back agreement' proves to be worthless, it will be very difficult to trace VWI. 

g) Their website is registered anonymously in Ontario, Canada.

I'll definitely pass on this offer and other offers that Vintage Wine Investors have recently made. Instead I'll consider maximising my savings in flying pigs – certainly a wasting asset! 

22.9.12: I'll also pass on the similar offer made on 2010 Château Margaux – again a 50% profit between now and 23rd January. 

Monday 10 September 2012

Stephen Cleeve: Commercial Land and legal action

I have been contacted by Jason Marshall, collections director at H&J Recovery Services on 07753-421136,, Marshall represents a client who invested £61,000 in one of Stephen Cleeve's land banking schemes through Commercial Land and saw no return. An out of court settlement has been offered but this has been judged as too low and County Court proceedings have now been launched. 

Marshall is very keen to hear from other clients of Stephen Cleeve, who have invested in his land banking schemes, with a view to taking legal action to recovery money lost. 

I shall be interested to see if following this post I get hassled by one of Stephen Cleeve's expensive legal firms claiming that I am harassing him and invading his privacy. See this 2011 post.

Stephen Cleeve is a formerly banned company director (an 8 year term) and was briefly UKIP's parliamentary candidate for the 2010 General Election until they found out about his past. 

Thursday 6 September 2012

FSA proposals on wine investments etc. miss real target

In August the FSA (Financial Services Authority) issued a consultation paper how how Unregulated collective investment schemes (UCIS) are promoted and sold with a view to tightening up procedures and providing more protection to consumers by limiting their promotion to sophisticated and wealthy investors.

We have seen a significant increase in sales of UCIS to retail consumers and are aware of a number of risks in this market. We highlighted our concerns in our Retail Conduct Risk Outlooks in 2011 and 2012.
CP12/19 - Restrictions on the retail distribution of UCIS and close substitutes
We have published a consultation paper proposing rule changes aimed at improving retail consumer outcomes by limiting the promotion of UCIS and close substitutes, and ensuring that they are recognised as specialised products unsuitable for general promotion in the UK retail market. As providing financial advice generally includes making a financial promotion, by limiting the promotion of UCIS we aim to limit the number of retail clients being wrongly advised to invest in UCIS.
For full details of our proposals please read the consultation paper.'

Wine is mentioned in the consultation paper as one of the areas that have concerned the FSA: 'Our work has identified situations where members of the general public have been invited to invest in pooled investments based on the performance of unusual assets such as traded life policy investments (TLPIs), fine wines, crops and timber.' 

Unfortunately, although in a Decanter news story on the FSA proposals, Chris Hamilton is quoted: 'FSA spokesman Chris Hamilton told there were numerous examples of unsuitable wine investments being sold, and pointed to an investigation earlier this year which estimated fine wine investors had lost £100m over four years by entrusting their savings to failed wine companies' the FSA proposals miss what ought to be their target completely. 

The FSA proposals cover wine funds, which are collective investments.  I cannot remember the last time I had a complaint involving a wine fund. They do not cover the widespread miselling of individual cases to individual investors as investments. The £100 million loss quoted by Hamilton was suffered by investors buying individual cases as an 'investment'. Even though they are clearly promoted as investments, these transactions are outside the remit of the FSA. So anyone can set up a wine investment company and make all sorts of far fetched and outlandish claims about wine investment returns often based on out of date statistics and the FSA can say nothing

The only possible exception to this might be the selling of en primeur. which might be deemed as a 'collective investment' as an individual's wine cannot be identified until it has been bottled.

In the meantime more and more 'wine investment' companies disappear with investors' hard earned savings. Those investors are now likely to endure a long-term financial mugging.