London Capital and Finance

jimjames

Alexland wrote: »

Doesn't sound like FCA intend to get involved in the recovery of money then.

As it's an unregulated product without FSCS protection I can't see why the FCA would get involved. There may be a moral case but nothing regulatory that would require it.

Sledger wrote: »

Any ideas from the Forum experts on how best to go about this or if its going to be just a waste of time and money.

It might be worth waiting to see what transpires - with the bank accounts frozen they can't make payments anyway and the terms mean you would be locked to the full term.

Sledger wrote: »

If FCA had unerthed anything untoward, I would have thought they would have involved a policing authority to plug any capital flight holes immediately so I cant understand them advising me to get legal guidance.

You seem to be suggesting that the only way you'd have lost money is in something fraudulent was taking place. It's entirely possible that money has been lost from activities that while morally questionable could be legal. Unless there is illegal activity there wouldn't be a reason to involve police or SFO. It's also possible that the web of transactions isn't something that is quick or easy to uncover especially when it also appears to include companies that have since been dissolved.

jimjames

Apologies for another post but it might be worth anyone involved to look at the previous and possibly similar situations with Provident Bonds and Secured Energy Bonds both of which went into administration leaving investors out of pocket. It appears that there was some compensation via the firm that approved the bond issue who does need to be FCA registered.

http://www.retailbondexpert.com/Blog/Latest-News/2018/07/Victory-for-investors-in-failed-secured-bond-the-need-for-caution-when-investing-in-retail-bonds-or-mini-bonds/

However the one difference was that due to the involvement of the regulated company it did mean that the bond was allowed to be marketed to retail investors which obviously wasn't the case with LCF

Alexland

In this case LCF were the FCA regulated company so if they fail they are hardly in a position to compensate investors for selling them the bonds in a company that failed.

jimjames

Alexland wrote: »

In this case LCF were the FCA regulated company so if they fail they are hardly in a position to compensate investors for selling them the bonds in a company that failed.

It wasn't LCF. The FCA regulated outfit that approved the LCF bond material were Sentient Capital London Limited. Bonds have to be approved by a regulated investment company who sign off the prospectus.

This Information Memorandum has been issued by London Capital & Finance Plc (LC&F) and approved for the purposes of section 21 of the Financial Services and Markets Act 2000 (FSMA) by Sentient Capital London Limited (“Sentient”) of 1 Royal Exchange Avenue, London, EC3V 3LT. Sentient is authorised and regulated by the Financial Conduct Authority with FRN 679298. Sentient is acting for LC&F and for no one else in connection with this offer

However it appears that Sentient Capital don't have a lot of assets so if they were found liable it would be the FSCS again that picks up the tab.

https://beta.companieshouse.gov.uk/company/09438213/filing-history

bail-in

If it came to that, I do not think Sentient would be liable re LCF. Sentient only signed off the memorandum and website material, whereas in the case of IPM re SEB failure IPM, in addition, took on the position of the security trustee and a director for SEB. Having thus a greater role in SEB, they could be held liable, according to the FOS decision.

Regarding LCF with the bank accounts frozen they can't make payments and the terms mean investors would be locked to the full term, in the case of LCF violating the terms of the trust if 75% of the bondholders agree all capital and interest would be required to be returned to the bondholders. Working in practice though could be difficult if no monies available in the frozen accounts or cannot be traced.

masonic

bail-in wrote: »

Regarding LCF with the bank accounts frozen they can't make payments and the terms mean investors would be locked to the full term, in the case of LCF violating the terms of the trust if 75% of the bondholders agree all capital and interest would be required to be returned to the bondholders. Working in practice though could be difficult if no monies available in the frozen accounts or cannot be traced.

Whatever the situation, it is clear LCF does not have the ability to repay bondholders even if the FCA restrictions are lifted, so such a call would put it in administration, whereupon it is likely the web of companies involved in relending the money would quietly dispose of their assets and fold. It's possible this is already happening.

Malthusian

jimjames wrote: »

Apologies for another post but it might be worth anyone involved to look at the previous and possibly similar situations with Provident Bonds and Secured Energy Bonds both of which went into administration leaving investors out of pocket. It appears that there was some compensation via the firm that approved the bond issue who does need to be FCA registered.

This is a case of "may be" present tense rather than "was" past tense. Independent Portfolio Managers has only just been declared in default by the FSCS - it started inviting claims from investors last month. The FOS has previously instructed IPM to cover investors' losses in full, which suggests that the FSCS will pay out on the same basis. However it's not clear at this point how much the FSCS has paid or will pay out.

There is a second precedent. Catalyst Investment Group signed off on ARM bonds which went bust back in 2013. The FSCS paid out on investors' claims against Catalyst for "recklessly misleading" them.

However note that the Secured Energy and Providence investors had to go to court to get the FOS to look at their case against IPM and thereby force open the route to the FSCS. LCF investors may have a fight on their hands if they hope to exploit this precedent and dump (allegedly) £200m of losses on the FSCS.

jimjames

This is an article about the FSCS issue with Providence

https://bondreview.co.uk/2019/01/07/fscs-invites-secured-energy-and-providence-investors-to-submit-claims-over-independent-portfolio-managers/

It does raise an interesting point about unregulated investments being covered by FSCS and then being rendered risk free

https://bondreview.co.uk/2018/09/28/is-the-fscs-about-to-make-all-unregulated-investments-risk-free/

jimjames

Spotted something in one of the linked companies, there was a loan of £50 million to London Oil and Gas shown in their accounts for 2017.

https://beta.companieshouse.gov.uk/company/09734575/filing-history

If the numbers are to be believed of a total of £200m then this would be 25% of the entire lending of LCF, quite a high risk strategy even if it's genuine. I seem to recall a total shown somewhere of 11 borrowers so the numbers are pretty small.

There also seem to be some very big fees being paid to arrange the loans in addition to the interest paid. Is this a way to recycle money out?

Some thoughts on why FCA might have taken action against LCF

https://damn-lies-and-statistics.blogspot.com/2019/01/why-was-fca-action-taken-against-london.html

verybigchris

jimjames wrote: »

I seem to recall a total shown somewhere of 11 borrowers so the numbers are pretty small.

That's right, it's in the strategic report in the last accounts. We'll get an updated figure in 9 days when the new accounts are published ... or maybe not.