The Financial Conduct Authority has opened an investigation into collapsed mortgage lender MFS amid allegations of fraud.
Market Financial Solutions Limited, which is based in Mayfair, London, entered administration last month owing billions.
A worldwide asset-freezing order has been imposed on founder and CEO Paresh Raja (pictured), who is based in Dubai, by administrators AlixPartners. He is limited to spending £5,000 per week without consent.
“We have opened an enforcement investigation into Market Financial Solutions Limited (MFS),” said the FCA.
MFS is an ‘Annex 1’ business, which is solely registered with and supervised by the FCA for its compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
Annex 1-registered firms are not authorised or subject to wider FCA regulation.
MFS provided property-related loans and it has been accused of fraud and wrongdoing by creditors including Barclays, Santander, Jefferies, Elliott Management and Atlas SP Partners, which are collectively £1.3 billion down.
Creditors have alleged that beneficiaries of mortgages from MFS included Raja himself as part of a structure that “may have been a device designed to extract monies … on false pretences”.
MFS has also been accused of ‘double pledging’ – where security is granted to two or more financial institutions at the same time over the same property.
Raja’s lawyer has previously told the Daily Telegraph: “Mistakes have been made but there has been no intention to defraud whatsoever and Mr Raja has not been the beneficiary of any shortfall (if any) there may be.”