The Solicitors' Regulatory Authority is unusually slacking in its approach to land-banking.

In a statement relating to its decision to strike off (disbar) solicitor Stephen Peter David Murrell, it says "We are concerned about a relatively new type of practice that targets the public by misleading them into investing in land for future development under false pretences."

But there is nothing new about land banking - and in the UK, the regulatory structure has brought it within the ambit of the Financial Services Authority as a "collective investment scheme." Many other countries find land-banking operations operating with impunity as rudimentary regulatory regimes require each specific business type to be named rather than, as in the UK, the activity to be the basis of regulation.

Then again, there is nothing new about the SRA's action against Murrell, either. It was announced in an SRA newsletter published 9 December 2011 but Murrell was struck of in March of that year.

The SRA says that the FSA estimates that UK investors have lost some GBP200 million in land banking frauds. But that is not the whole story: substantial sized sales operations have for some years operated across South East Asia exposing "investors" to both the risks inherent in the schemes and currency fluctuations. Indeed, some SEA currencies have appreciated against the pound by more than 30% since some investments were placed some four years ago.

Murrell, formerly of Staple Inn Partnership, was struck off the roll of solicitors for his involvement in a Collective Investment Scheme and for breaches of the Solicitors' Code of Conduct and Solicitors' Accounts Rules. He was ordered to pay costs of GBP42,180.95, an unusually large amount.However, the Solicitors' Disciplinary Tribunal ordered that the Costs Order should not be enforced without leave. The SDT's judgement says "

Murrell practised as "The Staple Inn Partnership" at 34 Cannon House, Cannon Drive, Canary Wharf, London, E14 4AS in London's Docklands. The SRA intervened in his practice in September 2009 on suspicion of dishonesty and failure to comply with the Solicitors' Accounts Rules designed to protect client moneys.

At the hearing into Murrell's conduct on 1 March 2011, he did not appear.

The full hearing notes are at http://sra.org.uk/documents/co...

In summary, the allegations were rather more than the SRA's simple summary indicates. In fact, Murrell was a shareholder in the company, not simply an adviser to it but that he did not inform "investors" of his personal involvement.

The notes cite a case of a plot of land bought for GBP45,000 but carved up and sold for GBP1.696 million.

But the core issue appears to be that the personal involvement continued even after the FSA informed the company that its activities were "illegal" and must be terminated. Instead, on behalf of the company, he sought two different Counsel's Opinions to try to find a way to operate the scheme outside the FSA's regulatory regime. Both advised the scheme as structured was a collective investment scheme and therefore subject to regulation. Even so, although the company paused in its sales, it did not take steps to entirely cease the regulated activities. As a result, Murrell was, ultimately, engaged in a criminal enterprise.

Geoffrey Williams, presenting the case for the SRA, told the SDT "‘The money has gone, certainly in most of the cases,’ Williams said, adding: ‘I cannot prove he (Murrell) is a fraudster… He was grossly reckless... ‘It appeared Mr Murrell ignored [the notices from the FSA and advice from the lawyers he consulted] in the pursuit of profit. The involvement of a solicitors’ firm was designed to give comfort to members of the public.‘We are satisfied that Mr Murrell played a controlling part in the catastrophic situation. As a result, members of the public have suffered and the reputation of the professional has been severely damaged.’

Somewhere, about half a million pounds has gone astray.

Murrell's whereabouts were not disclosed: his former office address was given in the Order and it is said that he "is believed to have ceased practice" in September 2009.

In a note addressed to Solicitors, the SRA says "You should be wary of getting involved in any transactions of this kind."