Small claims court/MLR

I have client A and Client B. Client A needed investors and Client B had money to invest. I introduced Client B to Client A and investment was agreed.

After receiving funds Client A refused to pay my introduction fee and therefore I issued small claims against Client A.

In its defence sent to court Client A states that I acted illegally in advising Client B on investments (because I am not registered under FSA to do so) and therefore because I acted illegally my invoice is void.

Client B has written to court to confirm that I did not give investment advice but did give company background of Client A and advised on EIS and CGT.

Client A sent a revised defence to court still claiming that I acted illegally.

Client A has not refunded the investment funds to Client B nor offered to do so.

A trial date has been set and my first course of action will obviously be to challenge this claim and to question why they have not refunded the money, and why if it is illegal, is the company trading with illegal funds contrary to POCA/MLR.

Now, I believe I’m in a catch 22 situation because maybe I will be deemed to be tipping them off in court. Is it too late for me to contact the directors of Client A and point out that in their haste to avoid paying me they have made a major error in making this statement? I’m sure two of the directors are unaware of the consequences of this statement and nothing is as yet proved to be illegal.

My other question would be whether a director who has since resigned but was around at the time the money was accepted is equally liable should I need to report under POCA/MRL?

And if they still insist I acted illegally what happens about the court case. Do I go ahead or do I ask for a delay and report POCA/MLR?

Anon