London Capital and Finance

jimjames

Sledger wrote: »

I would really like to thank all you guys for you input on this forum and just wish I had seen this . Surely we can take the FCA to task over this https://www.standard.co.uk/business/watchdog-was-warned-early-on-highrisk-lender-a4059191.html

Sadly there were plenty of warnings here if you look from page 1, some took heed and others didn't but hopefully it stopped at least a few people from handing over their money

masonic

verybigchris wrote: »

Just curious: are FCA regulated firms prevented from up-selling to existing "restricted investors"? I could imagine someone getting a foot in the door with an initial 10% of their net worth, then gradually getting hit up for more and more investments.

Firms should not knowingly accept more than 10% of someone's net worth per year. But there is no requirement to ascertain net worth. The letter of the regulations offers little in the way of protection. Even more legitimate firms are not really following the spirit of the rules. I suspect the rules were watered down through consultation.

masonic

{text_removed_by_MSE_Forum_Team} wrote:

Thats true Masonic. Whilst recovering money is primary in most peoples minds though, i think there may be an element of thinking that if youre not going to get your money back anyway, at least you would like to see justice being done.

TBH I think you're more likely to get your money back than see any real justice done.

{text removed by MSE Forum Team} post was really interesting, he really seemed to know what was going off. I read it as the introducers being paid out of our investment sums first, before lc&f even got the remainder...whereas other people seem to refute that.

It has to have been more subtle than that. If LCF didn't receive all of the bondholder capital and lend it out then there would have been a clear case of fraud, which would have taken events down a different avenue. The people behind this would not be so blatant. As I've mentioned before, the easy way to get around this is for interest and fees to be rolled up into the loan and retained, so that the money has come from bondholder capital, but it is structured as income.

Botheredin

masonic wrote: »

TBH I think you're more likely to get your money back than see any real justice done.


It has to have been more subtle than that. If LCF didn't receive all of the bondholder capital and lend it out then there would have been a clear case of fraud, which would have taken events down a different avenue. The people behind this would not be so blatant. As I've mentioned before, the easy way to get around this is for interest and fees to be rolled up into the loan and retained, so that the money has come from bondholder capital, but it is structured as income.

Hypothetically, if it has played out like {text removed by MSE Forum Team}s post what then? And also, if it was front loaded and classed as income what then?

masonic

Botheredin wrote: »

Hypothetically, if it has played out like {text removed by MSE Forum Team}'s post what then? And also, if it was front loaded and classed as income what then?

If money was fraudulently skimmed off of bondholder capital on the way in then those who committed such actions would be facing criminal charges and liability.

If it was structured as income, then that would be acceptable in the eyes of the law and might get the perpetrators on a regulatory blacklist for a while, but I doubt there would be meaningful consequences for them.

Botheredin

masonic wrote: »

If money was fraudulently skimmed off of bondholder capital on the way in then those who committed such actions would be facing criminal charges and liability.

If it was structured as income, then that would be acceptable in the eyes of the law and might get the perpetrators on a regulatory blacklist for a while, but I doubt there would be meaningful consequences for them.

Thanks. And if the underlying investments, i.e. the 12 companies, were non-starters from the outset, in your second scenario, were the case?

masonic

Botheredin wrote: »

Thanks. And if the underlying investments, i.e. the 12 companies, were non-starters from the outset, in your second scenario, were the case?

Not necessarily non-starters.

Typically, companies that borrow large amounts of money at eye-watering rates and let the lender withhold a chunk of the loan to cover the interest payments, will be extremely high risk endeavours that are much more likely to go to the wall than a typical company. If all goes well, they could repay, but the likelihood of this will tend to be quite low.

So a high risk gamble, using somebody else's money.

jimjames

masonic wrote: »

If money was fraudulently skimmed off of bondholder capital on the way in then those who committed such actions would be facing criminal charges and liability.

What about if the money arrived in the account on the way in as expected but was then very quickly paid out as commission on the expectation/hope that they would make sufficient in lending and fees to cover it? The amount loaned would be lower but then boosted by the interest and fees which is what looks like might have taken place.

masonic

jimjames wrote: »

What about if the money arrived in the account on the way in as expected but was then very quickly paid out as commission on the expectation/hope that they would make sufficient in lending and fees to cover it? The amount loaned would be lower but then boosted by the interest and fees which is what looks like might have taken place.

My understanding is that the agreement with bondholders was that all of the capital they invested was lent. So LCF would have needed to have written loans to that value. At that point money could have been retained and paid out, with the remainder actually advanced to borrowers against paper loans for the full sum.

So I think we are in alignment, just using different terminology.

Botheredin

masonic wrote: »

Not necessarily non-starters.

Typically, companies that borrow large amounts of money at eye-watering rates and let the lender withhold a chunk of the loan to cover the interest payments, will be extremely high risk endeavours that are much more likely to go to the wall than a typical company. If all goes well, they could repay, but the likelihood of this will tend to be quite low.

So a high risk gamble, using somebody else's money.

But no impropriety or liability back to the operators if it's above board right?