London Capital & Finance - FCA Investigation Update 2 Weeks on
It's now been 2 weeks since the FCA announced that they had frozen all assets and bank accounts of London capital finance after previously ordering them to remove all marketing materials.
In that time a lot of investigation has been done and a huge quantity of information gathered about LCF and the lending that they've done.
FCA announced on 28 December that they were investigating LCF. It's important to understand what a FCA investigation means. It's clear reading the details that an investigation is not relating to marketing materials. FCA state they must consider "the strength of the evidence and the proportionality and impact of opening an investigation".
2) Used Commission based promoters advertising with the ISA label to imply cash ISAs alongside claiming they were FCA authorised to give protection to the investment
They have Lent money to a web of associated companies registered at the same address and with the same directors. Some bondholders have been trying to justify this by saying that LCF say they put a director on the board of borrowing companies. This can be a legitimate process. However when that person is the ONLY director and the company is registered at the same address as LCF then it suggests they are not an independent company.
6) Directors requested companies be struck off by Companies House that had money owing to LCF or asset charges that had not been cleared
More than one company that owes money to LCF based on the charges on its Companies House record has requested to be struck off the register when they are already in breach of their account submission requirements with accounts overdue by months.
7) Loans made to brand new companies with no assets and no history - the opposite of their claims in marketing materials
LCF appear to have loaned money to a company 3 days after it was setup. The lending process would appear to rule out any company not trading in the last 3 years.
8) Loans made to non trading companies that had no income for the last 4+ years
A company that has not traded or made any profits in the last 3 years would appear to be ruled out from being a borrower of London Capital & Finance yet a company was given a loan that has not traded in the last 4 years.
Obviously companies can make profits or losses but a company owing money to LCF that makes a loss of £10 million should raise alarm bells over the sustainability of the loans.
10) The company named as the Trustee for the bonds, the impressive sounding GLOBAL SECURITY TRUSTEES LIMITED has been run by the same directors as LCF. As of April 2018 the majority owner of GLOBAL SECURITY TRUSTEES LIMITED is based in Malta
It's also been suggested that FCA taking action as they have done is a more serious sign. If they weren't worried then they could have used a voluntary undertaking rather than enforcement.
In that time a lot of investigation has been done and a huge quantity of information gathered about LCF and the lending that they've done.
FCA announced on 28 December that they were investigating LCF. It's important to understand what a FCA investigation means. It's clear reading the details that an investigation is not relating to marketing materials. FCA state they must consider "the strength of the evidence and the proportionality and impact of opening an investigation".
When you look at the known information about London Capital & Finance it doesn't look very promising for investors. This information is all public domain from Companies House and from other
1) Promoted unregulated bonds to unsuitable investors they knew were not high net worth and used phone calls to complete the transactions apparently telling people that they were FCA protected
1) Promoted unregulated bonds to unsuitable investors they knew were not high net worth and used phone calls to complete the transactions apparently telling people that they were FCA protected
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| Promoted unregulated bonds to unsuitable investors |
Some investors still appear to believe everything that London Capital & Finance are telling them despite the fact that they have been clearly lied to about the products they bought, the risk involved and the suitability of it for their life savings. They are blaming the FCA for stopping LCF trading when the reality is that it's LCF's fault that they were mis-selling and misleading bondholders about the destination of the loans they were making. It almost seems like some bondholders are suffering from a version of Stockholm syndrome by trusting LCF not Financial Conduct Authority.
2) Used Commission based promoters advertising with the ISA label to imply cash ISAs alongside claiming they were FCA authorised to give protection to the investment
Website Top ISA Rates listed LCF ISAs alongside cash ISAs. The LCF ISA is not a savings account, not a cashISA, is unregulated, unprotected by FSCS and your money is at risk of complete loss if the company goes insolvent. It is far more risky than investing in a stock market fund ISA.
3) Repeatedly changed their accounting dates to avoid submission of accounts and any scrutiny
LCF and associated loan companies have repeatedly used a loophole with Companies House with delay publishing their accounts. After the latest delay the new accounts are due 17 January 2019 so we'll know by next week if they are going to publish or to use the loophole to delay yet again. Several of the companies that LCF have loaned money to are in breach of filing rules as their accounts are months late being published.
4) London Capital & Finance have only lent money to 11 companies as of their latest accounts
3) Repeatedly changed their accounting dates to avoid submission of accounts and any scrutiny
LCF and associated loan companies have repeatedly used a loophole with Companies House with delay publishing their accounts. After the latest delay the new accounts are due 17 January 2019 so we'll know by next week if they are going to publish or to use the loophole to delay yet again. Several of the companies that LCF have loaned money to are in breach of filing rules as their accounts are months late being published.
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| Accounting dates changes |
They have Lent money to a web of associated companies registered at the same address and with the same directors. Some bondholders have been trying to justify this by saying that LCF say they put a director on the board of borrowing companies. This can be a legitimate process. However when that person is the ONLY director and the company is registered at the same address as LCF then it suggests they are not an independent company.
5) Director Robert Mannering Sedgwick was suspended as solicitor for his work on a carbon credit scam that he agreed was a "dubious investment"
This is a public record published by the Solicitor Regulation Authority. Robert Mannering Sedgwick allowed his company bank accounts to be used for money transfers to a scheme where an investor lost £80,000
This is a public record published by the Solicitor Regulation Authority. Robert Mannering Sedgwick allowed his company bank accounts to be used for money transfers to a scheme where an investor lost £80,000
6) Directors requested companies be struck off by Companies House that had money owing to LCF or asset charges that had not been cleared
More than one company that owes money to LCF based on the charges on its Companies House record has requested to be struck off the register when they are already in breach of their account submission requirements with accounts overdue by months.
7) Loans made to brand new companies with no assets and no history - the opposite of their claims in marketing materials
LCF appear to have loaned money to a company 3 days after it was setup. The lending process would appear to rule out any company not trading in the last 3 years.
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| London Capital & Finance Loan process |
A company that has not traded or made any profits in the last 3 years would appear to be ruled out from being a borrower of London Capital & Finance yet a company was given a loan that has not traded in the last 4 years.
9) Company with LCF loan made £10 million loss last year
Obviously companies can make profits or losses but a company owing money to LCF that makes a loss of £10 million should raise alarm bells over the sustainability of the loans.
10) The company named as the Trustee for the bonds, the impressive sounding GLOBAL SECURITY TRUSTEES LIMITED has been run by the same directors as LCF. As of April 2018 the majority owner of GLOBAL SECURITY TRUSTEES LIMITED is based in Malta
It's also been suggested that FCA taking action as they have done is a more serious sign. If they weren't worried then they could have used a voluntary undertaking rather than enforcement.
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