London Capital and Finance

Malthusian

jimjames wrote: »

According to the FT today, LCF were technically insolvent as far back as 2017

It was technically insolvent from day 1. A Ponzi scheme's liabilities always exceed its assets, no matter what they are.

It's now on record that LCF had no underlying loans which would have paid the required rate of return to pay off its investors, regardless of what its accounts said.

jimjames

Malthusian wrote: »

It's now on record that LCF had no underlying loans which would have paid the required rate of return to pay off its investors, regardless of what its accounts said.

Is that correct? My understanding was that the loans were to the value of the bonds even if the borrower only received 75% of it.

So if I borrowed £100, I only received £75 but I still owe £100 to LCF. I may still have no means to pay it back but in theory my loan will return the capital required.

Another one promoted by Surge is Grounds Investment, company only setup last month

https://damn-lies-and-statistics.blogspot.com/2019/03/grounds-investments-isa-review.html

Malthusian

That's just the accounting trick I mentioned earlier to allow London Capital & Finance plc to not report the yawning chasm between the scheme's assets and liabilities. Accounting tricks don't alter the fact that relying on new investors' money to pay off old ones constitutes a Ponzi scheme.

dale_cotterill

Interesting that the FSCS have come out and said that it acknowledged that investors had lost money "through no fault of their own".


Not really true is it? The warning signs were absolutely everywhere. Yes, they did a better job than some at making themselves look legit, but overall I expect it's the usual suspects who get caught out.


I know 'victim blaming' regardless of what occurred is no longer allowed, and the FCA was beyond useless and should have dealt with this years ago. But to absolve everyone who 'invested' from any form of personal responsibility sends out the wrong message.

Botheredin

Supercalafragalistic wrote: »

Sunday Times Article.....focus switched to Surge

Fraud investigators probing a £236m mini-bond scandal have turned their attention to an aborted property deal involving the middle man who brought investors into the fund.
Paul Careless owns Surge Financial, a marketing firm that earned about £60m in fees by drumming up interest in the mini-bonds sold by London Capital & Finance.
LCF is being investigated by the Serious Fraud Office (SFO) after it collapsed into administration last month with £236m of investor cash.
Administrators believe that bondholders’ money may have ended up enriching four men: LCF chief executive Andy Thomson, Simon Hume-Kendall, Elten Barker and Spencer Golding.
It has emerged that Careless, 43, co-owns a property investment vehicle alongside Barker. The company was a subsidiary of Careless’s property group, View Property. Barker was a director of some companies that borrowed from LCF.
The investment vehicle was set up in December 2017 for the sale of a property owned by Careless in the Isle of Wight. Barker had been supposed to find a buyer.
The sale never took place and the company has no assets, a spokesman for Careless said.
The SFO has written to View Property asking it not to dispose of any of Barker’s assets pending its LCF investigation, the spokesman said. Administrators believe LCF’s 11,600 retail investors could get back as little as 20% of their money.
Careless’s spokesman said Surge was a supplier of services to LCF and did not handle client money or deploy funds. Barker could not be reached for comment.

What about the other 9 SPV companies?

Supercalafragalistic

Botheredin wrote: »

What about the other 9 SPV companies?

Probably no cross over on the others.

Botheredin

Supercalafragalistic wrote: »

Probably no cross over on the others.

That is known yet...

Supercalafragalistic

Botheredin wrote: »

That is known yet...

Its all available on companies house (i think?) so guessing sfo would have noticed by now? #evertheoptimist!

Reaper

dale_cotterill wrote: »

Interesting that the FSCS have come out and said that it acknowledged that investors had lost money "through no fault of their own".

Not really true is it? The warning signs were absolutely everywhere. Yes, they did a better job than some at making themselves look legit, but overall I expect it's the usual suspects who get caught out.

I know 'victim blaming' regardless of what occurred is no longer allowed, and the FCA was beyond useless and should have dealt with this years ago. But to absolve everyone who 'invested' from any form of personal responsibility sends out the wrong message.

To regulars on here it was obvious from the start it should be avoided, but to the average punter it was not. The average investor doesn't know the difference between regulated and unregulated and even if they did LCF announced they were regulated.

LCF said although capital was theoretically at risk in practice they had security on the assets of borrowers far greater than the amount they lent out.

LCF said careful due diligence was carried out on all the prospective borrowers and on the phone that money was diversified to over 200 borrowers.

I doubt many investors looked up their accounts at Companies House but even if they had the hole that existed was covered up and not at all obvious.

I don't blame the victims. When companies tell outright lies then it is not surprising investors believe the level of risk is much lower than it really is.

rr755507

UK watchdog to investigate handling of London Capital & Finance failure
https://www.reuters.com/article/us-britain-regulator-london-capital-idUSKCN1RD2RM