Bank issues its second warning on Spanish operation

An unauthorised investment firm controlled in Spain is still seeking Irish business four months after the Central Bank issued a formal warning to consumers about the company. Morgan Paris & Co is the subject of a second warning today by the Bank, which said it was "pretty active" in the Irish market.

The Bank also warns about the activities of three other unauthorised firms: Swiss-based Franklin Management; US-owned Currency Associates; and Cogan Davis International, registered in the Cayman Islands.

Such companies typically seek large-scale investments of up to €60,000, although some accept investments in the €20,000 range. The Central Bank said members of the public could contact its information line - at 1890-200-469 - to check the status of investment firms or pass on data.

While it is a criminal offence for unauthorised investment firms to operate in the Republic, a spokesman said the Central Bank does not generally pursue such companies. Its usual approach was to inform the domestic regulators in the home markets of such firms although many were not regulated in the home markets.

The notices today bring to 101 the number of unauthorised companies identified in formal warnings since the Bank obtained the relevant powers under the Investment Intermediary Act in 1998.

Such a scale of activity indicates that the operators of "boiler room" funds see plenty of opportunities to drum up business in the Irish market, where the boom and increased wealth has been the subject of frequent press coverage abroad.

Irish customers are not eligible for compensation from the Investor Compensation scheme if an unauthorised investment firm collapses.

The Central Bank spokesman said: "The publication of these notices over the past four years has been very successful in two ways. They have served to warn consumers about particular firms and have also generated calls from the public alerting the Bank to other firms, which we then investigate."

Morgan Paris is not the first company to be identified in more than one formal warning.

The best-known example in recent times was Millennium Financial, the subject of four warnings, which was restrained from trading by the Securities and Exchange Commission in the US last June.

Irish investors were among 150 individuals in 20 countries defrauded of more than $2 million (€2.03 million) by Millennium. Most of those who invested in the company were in the Republic and Britain.

The first warning about Morgan Paris was issued at the start of March. The company is thought to have been "cold calling" potential clients with offers of investment opportunities in the US tech markets. Its continuing attempts to seek business in the Republic come despite notice from the Central Bank that it is not authorised to trade here.

About 16 of the unauthorised companies identified by the Central Bank operated in part or whole from Spain. The remainder were based throughout the US, south America, Asia and Europe.