Founded in 2002, Capital Solutions was a Guernsey incorporated entity, licensed to carry out controlled investment business and act as an insurance intermediary.
The company came to the attention of the Guernsey Financial Services Commission (GFSC) after the regulator investigated the conduct of two overseas companies that were connected to Capital Solutions: Stillwater Worldwide Limited and Stillwater Investment Enterprise Limited.
Both Stillwater entities were jointly owned by Philip Montague and an unnamed associate, both of whom claimed to be directors of the companies, and operated out of the Capital Solutions offices.
Montague was also the controller of Capital Solutions and its director until he resigned in December 2015.
The Guernsey regulator worked with its partners in the British Virgin Islands, Gibraltar, British Columbia and the Isle of Man as part of its investigation.
Although not initially the target of GFSC’s enquiry, the scope of the regulator’s investigation was broadened to include Capital Solutions as a result of the connection all of the companies had to Montague.
According to GFSC, Capital Solutions was perceived to be the regulatory face of both Stillwater entities in Guernsey, when both were, in fact, not licensed.
In addition to its connection with the Stillwater companies; Capital Solutions, Montague, Scullion, and de Carteret were reprimanded for failing to organise and control internal affairs, retain company records, and understand the company’s legal and professional obligations.
Fines and bans
Montague has been fined £35,000 ($44,666, €39,297) and banned from performing any function related to business carried out by any GFSC-licensed entities for seven years.
His former Capital Solutions colleagues Terence Scullion and David de Carteret received fines of £21,000 and £10,500, respectively.
Scullion has been banned for five years, while de Carteret was handed a ban of three years and six months.
Were it not for the fact that Capital Solutions is insolvent, a penalty would also have been levied against the firm, the GFSC said.
Between March 2009 and August 2010, Montague was the controller and claimed to be a director of Stillwater Worldwide.
During this period, the company acted as promoter and sub-investment adviser to two unnamed funds of a Guernsey protected cell company’s collective investment scheme.
In August 2010, Stillwater Worldwide’s role was transferred to Stillwater Investment Enterprise, which continued to act as sub-investment adviser and promoter of the funds until September 2015.
Between March 2009 to September 2015, Montague and his associate signed agreements on behalf of Stillwater Worldwide and Stillwater Investment Enterprise while purporting to be their directors.
Through its investigation, the GFSC found that neither Stillwater company was licenced to provide advice on, or promote, collective investment schemes.
Neither Montague nor his associate were ever directors of Stillwater Worldwide and did not become directors of Stillwater Investment Enterprise until July 2013.