A law firm principal who allowed his clients to enter a risky and ultimately fruitless investment scheme has been fined £17,000. Ming Fai Tam, also known as Matthew Tam, charged around £1,300 to clients for every property investment he advised on. In total between 2017 and 2020 his firm Batchford Solicitors worked on behalf of several overseas buyers on their purchase of around 312 properties.
According to a Solicitors Regulation Authority decision notice, Tam offered no supervision to one of his staff acting on the investments and failed to point out several red flags about the risky nature of the financial commitment.
The property was being bought from a special purchase vehicle with no trading accounts, with clients paying initial deposits of between 30% and 100% of the purchase price. The company promised to construct or refurbish buildings to turn them into flats, student accommodation or hotel rooms, with the project marketed to buyers mainly in the Far East as buy-to-let investments with guaranteed income. However the developments failed and promised returns were not paid.
Buy-back provisions included in the investment were of use only if the selling company had the necessary funds, and rental agreements were potentially unenforceable and ineffective.
The SRA conducted a forensic investigation of 14 client files in six developments where these failings were identified.
Tam admitted failing to give adequate advice to clients on the risks inherent in off-plan buyer-led investment schemes and failed to ensure clients understood the risks they were taking on.
He also admitted failing to train staff to maintain a level of competence or to have a system for supervising clients’ matters. His firm, based in the City of London and latterly known as MFT Solicitors, closed in 2021.
The SRA said Tam had not heeded warning notices from 2016 and 2017 about the risks of such investment schemes. He had also not fulfilled his duty to provide people in his firm with adequate training and supervision.
In mitigation, Tam, who now works for Chan Neill Solicitors in the City, said he undertakes training and keeps abreast of legal developments and his files are reviewed by partners in his new firm. He no longer takes on work involving the sale of fractional units such as hotel rooms or office space and takes on work involving new build transactions only where deposits are protected and are no greater than 10%.
The SRA said a fine was appropriate to uphold public confidence in the solicitors’ profession.
‘Clients lost money following their investments in the development schemes which they may have reconsidered had they received proper and adequate advice,’ added the regulator. ‘Issuing a fine to solicitors who give inadequate advice demonstrates to the public that the SRA takes such matters seriously and expects solicitors to maintain appropriate standards.’
Tam also agree to pay £1,350 costs.