London Capital and Finance

masonic

Botheredin wrote: »

Not at all. Just pointing out that on one hand it's "Here is the world!" Then it is, in very small print and backed by sharp sales practices, "Here is a bedsit..."

When you veer off the path of regulated investments with consumer protection and venture into the world of high risk unregulated investments, then you enter the wild west where such practices are commonplace and not illegal. Pretty much every small unlisted company I've encountered raising funds will tend to over-exaggerate the opportunity and downplay the risks. Where LCF differed is that they began persistently targeting normal consumers, which is why the FCA took action.

Jelli

Is it possible for MSE admins to create a sticky pointing people towards {text removed by MSE Forum Team} Facebook group to help swell the numbers? We need as many investors there as possible, so we can go forward with Jane's help and a strategy. They've already reached out to some newspapers but any other ways would be great.

Botheredin

masonic wrote: »

When you veer off the path of regulated investments with consumer protection and venture into the world of high risk unregulated investments, then you enter the wild west where such practices are commonplace and not illegal. Pretty much every small unlisted company I've encountered raising funds will tend to over-exaggerate the opportunity and downplay the risks. Where LCF differed is that they began persistently targeting normal consumers, which is why the FCA took action.

Thanks for the insight. FCA went too little too late. I understand individual businesses overstating but this is over £200m in the hands of unqualified, big spending men-children by the looks of it.

Somewhere the line of civil vs criminal should be looked at, examined and a fair, impartial judgement handed down. All I'm saying.

antrobus

Botheredin wrote: »

Sure, but these accounts are over a year old. Non one knows what's in the rest of it that hasn't been filed yet.Also, the point remains that they state because of FCA action they could raise no more funds hence insolvency. Sounds a very flawed model.

Indeed they are. The 2018 accounts should have been filed on the 17th, but clearly events have overtaken that. But the 2017 accounts are the latest available.

I simply thought it might be useful to know that there were only 11 corporate borrowers and that there was supposed to be oodles of security.

As to the flawed business model. Quite possibly, But there is a long list of businesses that would similarly crash and burn if the cash stopped coming in.

londoninvestor

Botheredin wrote: »

Somewhere the line of civil vs criminal should be looked at, examined and a fair, impartial judgement handed down. All I'm saying.

One non-criminal avenue that might bear fruit is disqualifying the directors from future directorships: link

Director disqualification examples of such false or misleading statements can be misleading marketing materials published with the aim of attracting customers or allowing the company to make misleading representations to creditors or regulatory authorities.

...

Some directors have been known to use company money to meet mortgage liabilities, make payments to HMRC for personal tax liabilities, pay or make loans to other companies of which the director has an interest, withdraw cash for personal use, pay for beauty treatments, make payments to former spouses, pay of taxis to take directors’ children to school, pay of school fees and pay for. foreign travel not connected to the business. All of these sums can be potentially reclaimed (subject to the expiry of any relevant statutory limitation period).

With respect to the last part though, I suspect they might be one step ahead and have ensured there are minimal assets in their name to be reclaimed.

Malthusian

antrobus wrote: »

Indeed they are. The 2018 accounts should have been filed on the 17th, but clearly events have overtaken that.

They should have been filed in October, but LCF exploited a loophole to extend the deadline to January 17th.

As to the flawed business model. Quite possibly, But there is a long list of businesses that would similarly crash and burn if the cash stopped coming in.

No legitimate business depends solely on new investment coming in.

If the business plan depends on securing further investment at a later date this must be fully disclosed to the investors upfront.

Aretnap

londoninvestor wrote: »

One non-criminal avenue that might bear fruit is disqualifying the directors from future directorships

True, though as Malthusian hinted at, if the directors are treating this as one last gig before they retire, the threat of disqualification is not exactly a huge deterrent.

Sledger

Malthusian wrote: »

They should have been filed in October, but LCF exploited a loophole to extend the deadline to January 17th.



No legitimate business depends solely on new investment coming in.

If the business plan depends on securing further investment at a later date this must be fully disclosed to the investors upfront.

Ernst youung carried out the audit on the 11 companies and signed off accoinbts on 16 Feb 2018 that were 10 months old read the directors report as a going concern . saw the Previous accounting period had been shortened on 16 Oct 2017 and 9 Jan 2018 and inspected the loan book. Surely EY should have heard alarm bells ringing and closely looked at the loan book of the 60 million at the time and checked the 11 companies to verify capital and interest was being paid back as stated in the Directors report claiming was on average 3 years. Surely he would have checked that the business cash flow as indicated in the accounts was not dependant on new Bond holders incoming money to keep it ticking over and also seen the huge chunk of capital going to Surge if that were the case . The accounts figures look credible back then with those same 11 companies that are now claimed to be iffy with no capital and interest being paid back..

Reaper

Is this correct? It is taken from https://www.londoncapitalandfinance.co.uk/faqs.pdf

The issuing of minibonds does not normally involve the carrying on of a Financial Conduct Authority (‘FCA’) regulated activity. Therefore, LCF did not need to be authorised by the FCA to issue the mini bonds. In order to promote the mini-bonds the content of the promotional material (such as brochures and investment memorandum) needed to be approved by an FCA authorised person. Once LCF became authorised by the FCA on 07/06/2016, it was able to issue its own promotional material. In doing so, it was subject to FCA’s financial promotion rules.

Surely the FCA authorisation was not investor related so marketing materials aimed at investors should still have been vetted by a suitably authorised person. Or is that not the case? If not then it is another hole in the regulations.

Malthusian

It is correct. Any FCA authorised firm can authorise financial promotions. Doesn't matter if your only authorised activity is insurance intermediation, restricted to llama farmers in Tibet named Dennis who qualify as eligible counterparties on alternate Thursdays. You can authorise any financial promotion on any type of product under the sun.