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Court Rules that London Capital and Finance (LCF) was a Ponzi Scam
jimjames
Posts: 19,033 Forumite
I've not seen any mention of this verdict on the forum. I know the previous post was deleted because the case was ongoing but as the judgement has now been made I assume it is ok to post. I think many of us will feel vindicated that what we thought 8 years ago and warned those asking questions here has now been proved correct.
From the link below:
The Court concluded that LCF had mispresented itself to the public in a widespread, fundamental and systematic way, and had deliberately created a false impression about the company.
The Court also concluded that LCF was operated as a Ponzi scheme. It very frequently paid funds from new bondholders to borrowers which subsequently (and indeed, almost immediately) returned these amounts to LCF to enable it to make interest or redemption payments to existing bondholders. LCF depended almost entirely on new bondholder investments to make interest and redemption payments to existing bondholders, as there was no independent source of income from LCF’s borrowers from which to make the payments.
Summary is here
https://www.judiciary.uk/wp-content/uploads/2024/11/LCF-Court-Press-Summary-141124.pdf
From the link below:
The Court concluded that LCF had mispresented itself to the public in a widespread, fundamental and systematic way, and had deliberately created a false impression about the company.
The Court also concluded that LCF was operated as a Ponzi scheme. It very frequently paid funds from new bondholders to borrowers which subsequently (and indeed, almost immediately) returned these amounts to LCF to enable it to make interest or redemption payments to existing bondholders. LCF depended almost entirely on new bondholder investments to make interest and redemption payments to existing bondholders, as there was no independent source of income from LCF’s borrowers from which to make the payments.
Summary is here
https://www.judiciary.uk/wp-content/uploads/2024/11/LCF-Court-Press-Summary-141124.pdf
Remember the saying: if it looks too good to be true it almost certainly is.
11
Comments
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In indirectly related news from yesterday, the FCA got a lot of criticism for generally being hopeless at preventing these frauds.
MPs brand UK financial regulator 'incompetent' - BBC News6 -
The FCA are still doing nothing to stop scams and protect consumers. They still act that if it's not FCA regulated then they have no interest in doing anything at all.
It's also quite shocking that this is a civil not criminal case. Six years on from the collapse there is still no sign of the Serious Fraud Office (SFO) taking any action against those involved despite the very clear evidence presented in this trial.Remember the saying: if it looks too good to be true it almost certainly is.7 -
Even when a firm is FCA authorised (as was the case with some of the P2P lending firms that have been implicated in fraud), the FCA has turned a blind eye for as long as possible.Their complaints scheme is also a joke, with many who complained about the FCA's negligence still waiting on a response several years down the line, having received dozens of updates stating they need more time to reach a decision.3
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Full judgment is here if anyone wants to read the whole thing in a moment of madness desperation interest
London Capital & Finance Plc & Ors v Thomson & Ors [2024] EWHC 2894 (Ch) (14 November 2024)2 -
Back in 2020 Nikhil Rathi was appointed to run the FCA because he was "a safe pair of hands". In other worlds somebody who would keep the status quo and not rock the boat. However what was needed was somebody who would rock the boat and transform the organisation.Albermarle said:In indirectly related news from yesterday, the FCA got a lot of criticism for generally being hopeless at preventing these frauds.
MPs brand UK financial regulator 'incompetent' - BBC News
The MPs shouldn't be surprised to discover nothing has changed.4
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