Tuesday, 11 June 2019

LCF Mini Bonds or ISA? Investor Confusion over FCA Terminology

There have been reports that some investors in London Capital and Finance are unhappy with the use of the term "mini-bond" to describe what they purchased from LCF. However the reports just highlight further the confusion from many investors over what they actually bought.

Many people seem to have little understanding of the structure of an ISA and that it is only a tax wrapper rather than a product in its own right. It's partly understandable as most people have no knowledge of ISAs other than cash ISAs.

The London Capital and Finance website also didn't help matters by listing ISAs and bonds separately - in reality they are invested in exactly the same product but the ISA just has a tax wrapper around it meaning no tax is due on any income from it.

LCF Mini Bonds or ISA? Investor Confusion over FCA Terminology
LCF Mini Bonds or ISA? Investor Confusion over FCA Terminology

The screenshot above shows the LCF website that doesn't make clear that the ISA and bond contain exactly the same mini bonds and that the only difference is that the ISA is tax free - the underlying product is the same.

Unfortunately for investors LCF used misleading and missing information to lure investors in but the reality is that they were sold mini bonds - defined as illiquid debt securities issued by companies to retail investors. This is exactly what the LCF investors bought - they may use the word "secured" as well but as is clear from the administrators secured has no meaning when the assets are either non existent or worth little compared to the value of the outstanding debt.

The important learning point is that ISAs are not just cash ISAs. Too many retail investors don't understand that there are far more variants that involve risk to capital and this is something that the FCA needs to address as well as dealing with the mini bond providers that are selling unsuitable products to unsuspecting punters.

Thursday, 6 June 2019

Barbican ISA Bond Review - Is it a Scam?

One of the latest ISAs being advertised by Review My ISA is called Barbican ISA claiming to offer a fixed rate of 7%. However if you look at the small print you will find out some worrying details.

Barbican ISA Bond Review - Is it a Scam?
Barbican ISA Bond Review - Is it a Scam?
Despite the claim that the ISA is regulated and authorised by the FCA it is important to note that this product is not protected by the FSCS so you could lose all your money if the investment goes wrong as investors in London Capital and Finance have found to their cost. This ISA is promoted on Facebook by "Mark's Money Matters" who seem to have a track record for promoting misleading investments that are listed as savings.

The key point is that despite all the references to SAVINGS this is not a savings product but an investment where you can lose all your money and the value is not guaranteed. Even the interest rate is not fixed as they could go bust before the end of the term as LCF did.

We are not suggesting that Barbican ISA is a scam or is likely to go bust but their advertising is certainly against the spirit of FCA regulations where the risks of investing are not made clear to those looking to put their money into the product.

Remember - not all ISAs are cash ISAs. This is an investment ISA investing in Peer 2 Peer loans so your money is not guaranteed.

Having done a bit more digging on the page "Mark's money matters", it looks to be run by a friendly "Mark" who posts photos of him & his wife along with tips about flights and general chit-chat and claims to be a retired bank manager living in Cotswolds.

Curiously Facebook insight shows that it's managed from Ukraine and Estonia as well as the UK so maybe Mark isn't who he seems. Wonder if it's stock photos?

Wednesday, 29 May 2019

Boris Johnson & Brexit NHS £350m Court Case

After all the posts about London Capital and Finance this is finally another blog post more in line with my original intention for this blog.

The fascinating news today is that Boris Johnson has been found to have a case to answer and will be facing court for charges of "Misconduct in Public Office" over his claims during the EU referendum that the UK pays the EU £350 million every week. Depending on the signage this claim was either that we could spend some on the NHS or as the sign below shows, spend ALL of it on the NHS.

Boris Johnson & Brexit NHS £350m Court Case
Boris Johnson & Brexit NHS £350m Court Case

Boris Johnson had several opportunities to correct the numbers and was warned by the Office for National Statistics that the number could not be justified but he carried on using the £350 million figure. Rather than apologising he has repeatedly continued to state the number refusing to accept that it is incorrect and not grounded in reality.

It will be interesting to see how the court case develops and if this could be something that yet again derails his bid to be Conservative party leader and Prime Minister.

Certainly misleading and giving incorrect information seems to be quite a pattern with Boris as highlighted by an interview with Eddie Mair back in 2016 when various examples from his previous careers were raised from apparently lying about an affair when in government to making up quotes when he was a journalist.

Friday, 17 May 2019

LCF Properties Assets Frozen by Serious Fraud Office

Jim Armitage of the Evening Standard has reported that various people linked to London Capital & Finance, some of whom were arrested by the Serious Fraud Office in March 2019 have had property & assets frozen so that they are unable to sell or transfer them. The names associated with these freezing orders will be familiar to anyone who has been following the LCF saga and include the CEO of LCF Andy Thompson as well as Simon Hume Kendall CEO of the largest borrower from LCF.

LCF Properties Assets Frozen Fraud Office
LCF Properties Assets Frozen Fraud Office

Monday, 29 April 2019

LCF Trustees Acting Against Bondholders

The London Capital & Finance saga took another bizarre twist this week with the trustees called Global Security Trustees (GST) that are supposed to be protecting the bondholders interests (as they hold a debenture in favour of bondholders) voting against the proposals to form a creditors committee.

You may remember from previous blog posts that there were some strange goings on with GST. The trustees had been sold to a company based in Malta but are now run from the UK again. The directors of GST have yet again changed and are now Jeremy Friedlander, Stephen Gill and Mark Pollard. Jeremy Friedlander is also one of the shareholders of GST.

LCF Trustees Acting Against Bondholders
LCF Trustees Acting Against Bondholders
In another twist GST claimed to be representing holders £57 million of bonds. It's not clear how they were able to do that when they have no assets themselves other than £100 but I suspect they were able to engineer proxy votes for chunks of investors. It could even be that somewhere in the LCF deeds gives GST a block vote which could give them control.

They have given no indications why they chose to vote against the formation of the creditor's committee.

You can read more about Global Security Trustees here and the sale to Oracle Limited based in Malta

Bondholders were sold the LCF products based on a security trustee that was there to look after their interests. It doesn't appear to be that way now

Tuesday, 23 April 2019

Signature Capital Review - Is it a Scam?

It looks like Signature Capital are very keen to get threads removed from Money Saving Expert that give information about their investment schemes. An original thread as listed below has been deleted. A new question is here


This was the original post. Personal names have been removed as per MSE legal policy but can be easily obtained on Companies House.

Originally Posted by RaymondV
I’m looking to invest and have signed up to a number of offers. I keep getting regular emails from one group in particular, Signature Capital from Liverpool. Has anyone heard of this group? The offers are all similar and high yield 12% +. A quick search on Companies House shows the company trading less than 1 year. Interestingly the Director Lawrence Kenwright holds 33 appointments but none preceding 2016. The company boasts projected profits of £37.5 million for 2017/18. That seems quite high for a new company. I got an email today saying that Signature Capital scored a 9 out of 10 in the “independent” Bond Review Investor Chronicle. It turns out that the only other director Kent Laws registered the company Investor Chronicle in April 2018. It doesn’t seem independent to me. Perhaps someone can give me some feedback who is truly independent and not one of their salesmen. Something doesn’t feel right.
The feedback given in the original thread was unanimously that the OP should not invest.

The OP quoted figures which are from the companies' own accounts published on Companies House and are legally bulletproof.

Other non-disputable facts include:

- Any investment offered by Signature Capital which includes a "fixed" or "guaranteed" "rental" agreement is in reality an investment in Signature Capital, as you are relying on Signature Capital to pay your returns regardless of how much the property yields

- Signature Capital is a micro-cap unlisted company and any investment in a micro-cap unlisted company is ultra high risk

- Anyone investing in property should hire their own valuer and not just hand over what the seller says it's worth.

Another fact confirmed by companies house and in the public domain is that the director of the firm called Investor Chronicle, that wrote the independent review of the Signature Capital Investment was also a director of Signature Capital at that time.

Sunday, 14 April 2019

LCF Saga - Another One Bites The Dust

The saga of London Capital and Finance and their borrowers shows no signs of going away. It's been fairly quiet on the blog front recently but primarily because the mainstream media have finally started to cover the story.
LCF Another Borrower Bites The Dust

One bit of news this week is that another borrower of LCF has gone into administration making three companies now being run by administrators including LCF. After London Oil and Gas, the largest borrower from LCF with £122 million went into administration a few weeks back, a linked company London Power Corporation run by Simon Hume Kendall and Elten Barker has now filed for administration too.

Having borrowed £122 million from LCF, London Oil & Gas loaned £16.6 million to a company to buy shares in London Power Corporation. That money is presumably now at risk too.

The dominoes are all falling down around the web of LCF linked companies.