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  • FIRST POST
    • daniel80
    • By daniel80 22nd Oct 15, 5:31 PM
    • 230Posts
    • 48Thanks
    daniel80
    London Capital and Finance
    • #1
    • 22nd Oct 15, 5:31 PM
    London Capital and Finance 22nd Oct 15 at 5:31 PM
    Anyone had any dealing with this company. My son has 25k to invest for only 2 years as it will be a house deposit. Iv`e told him to stay away from the stock market as 2 years is not long enough. As he is not overly keen with saving accounts cash isa`s etc due to low interest rates I said what about premium bonds a gamble on winning but stake is safe only loss would be inflation. When I googled investment ideas a link came up who were called specialist investment ideas with free advice. I put in my details..I received a call about half an hour later the guy recommended the above company which was based in Mayfair. he sounded very posh. He said London Capital and Finance were offering bonds paying 8% the money being lent to various companies to a maximum of 60% of their assist. He seems more of a salesman than an advisor and wants to phone back Monday. Brochure looks ok online but something does not seem right. Anyone dealt with these.

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    Last edited by Former MSE Andrea; 01-09-2016 at 1:14 PM.
Page 29
    • masonic
    • By masonic 9th Jan 19, 11:24 AM
    • 11,774 Posts
    • 9,405 Thanks
    masonic
    That would make sense. However if a company balance sheet is totally identical for 3 consecutive years how can it possibly be trading?
    Originally posted by jimjames
    I think that question answers itself.
    • Sledger
    • By Sledger 9th Jan 19, 11:54 AM
    • 94 Posts
    • 29 Thanks
    Sledger
    I have been onto the FCA sevearl times regarding their role and powers in their investigation and what clout if any they had . I have trouble navigating around things so thank you bailin for post 547 and 548 which gives some confidence if things go pearshape which the FCA could have easily steered me to in particular this one.

    This Practice Note explains the offence of causing a financial institution to fail under the Senior Managers and Certification Regime (SM&CR) created by the Financial Services (Banking Reform) Act 2013 (FS(BR)A 2013). It covers the elements of the offence under section 36 of FS(BR)A 2013, key definitions and the investigation and prosecution of this offence. The Practice Note also explains the investigatory regime created by the act and offences of falsifying, concealing or destroying evidence under section 90 of FS(BR)A 2013 and disclosing confidential information under section 93 of FS(BR)A 2013.
    • jimjames
    • By jimjames 9th Jan 19, 12:32 PM
    • 13,234 Posts
    • 12,297 Thanks
    jimjames
    There's some more detail on a company that LCF appears to have loaned money to.

    It seem they have lent some or all of £5.7 million to a company called CV Resorts registered at the same address as LCF that has never traded and has made no payments to the loans in the last 4 years. Something is seriously amiss with their business!

    https://damn-lies-and-statistics.blogspot.com/2019/01/london-capital-finance-have-loans.html
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Sledger
    • By Sledger 9th Jan 19, 6:38 PM
    • 94 Posts
    • 29 Thanks
    Sledger
    It seems the 200 million is a under estimate.


    FCA have just warned all CEO about misleading advertising and LCF gets a feature

    The warning comes in the wake of the FCA’s investigation into London Capital and Finance, which has meant uncertainty over the outcome of 14,000 customers’ investments, worth around £250m, in LCF’s mini-bonds. While LCF is regulated by the FCA, mini-bonds are not regulated products, meaning investors have no recourse to the UK’s Financial Services Compensation Scheme and could be wiped out if LCF defaults.


    What is totally unacceptable here is the business Model gives the impression the Loans go to real companies with assets similar to Lending Crowd etc . It appears they lent it to themselves with no real assets. How Did Ernst Young verify thatr big chunk of value of secured 284.75 million assets in the accounts.
    Last edited by Sledger; 09-01-2019 at 6:44 PM.
    • Sledger
    • By Sledger 9th Jan 19, 6:56 PM
    • 94 Posts
    • 29 Thanks
    Sledger
    and that value of assets of 284.75 million was back in April 2017 against 60 million of loans, Where did {Text removed by MSE Forum Team} come up with that figure and what asset figure would he put against 250 million worth of bonds if they had submitted proper accounts on time
    Last edited by Former MSE Andrea; 22-02-2019 at 1:28 PM.
    • jimjames
    • By jimjames 9th Jan 19, 7:45 PM
    • 13,234 Posts
    • 12,297 Thanks
    jimjames
    London Capital & Finance - Facts
    What is totally unacceptable here is the business Model gives the impression the Loans go to real companies with assets similar to Lending Crowd etc . It appears they lent it to themselves with no real assets. How Did Ernst Young verify thatr big chunk of value of secured 284.75 million assets in the accounts.
    Originally posted by Sledger
    Good question but bear in mind many of the companies used are classed as micro cap or small so don't need to have any audit of their accounts.

    When you look at the known facts about LCF it doesn't look very good. I don't think any of these are in dispute but feel free to correct if you disagree

    1) Deliberately promoted unregulated bonds to unsuitable investors they knew were not high net worth and used phone calls to complete the transactions telling people that they were protected
    2) Knowingly used the ISA label to imply cash ISAs alongside claiming they were FCA authorised to give protection to the investment
    3) Repeatedly changed their accounting dates to avoid submission of accounts and any scrutiny
    4) Lent money to associated companies registered at the same address and with the same directors
    5) Director {Text removed by MSE Forum Team} was suspended as solicitor for his work on a carbon credit scam that he agreed was a "dubious investment"
    6) Directors requested companies be struck off by Companies House that had money owing to LCF or asset charges that had not been cleared
    7) Loans made to brand new companies with no assets and no history - the opposite of their claims in marketing materials
    8) Loans made to non trading companies that had no income for the last 4+ years
    9) The company named as the Trustee for the bonds, the impressive sounding GLOBAL SECURITY TRUSTEES LIMITED is a dormant company with assets of £100.
    10) As of April 2018 the majority owner of GLOBAL SECURITY TRUSTEES LIMITED is based in Malta

    It's also been suggested that FCA taking action as they have done is a more serious sign. If they weren't worried then they could have used a voluntary undertaking rather than enforcement.
    Last edited by Former MSE Andrea; 22-02-2019 at 1:29 PM.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Sledger
    • By Sledger 9th Jan 19, 8:10 PM
    • 94 Posts
    • 29 Thanks
    Sledger
    1), and 2). A little bit of misleading advertising is of no consequence if your business model is sound and adhered to which 3-8 demonstrates it borders on fraud. So I assume FCA will act on 3-8 as its in their scope and its irrelevant where the funds are sourced from a piggy bank, FCIS protected money or mini bonds ( not FCA regulated) whatever. Tracing and recouping the funds via thumbs screws to get it back as the bulk of this 250 million is somewhere . Not just say its sourced from mini bonds out of FCA scope ie to quote " mini-bonds are not regulated products, meaning investors have no recourse to the UK’s Financial Services Compensation Scheme and could be wiped out if LCF defaults."
    Last edited by Sledger; 09-01-2019 at 8:13 PM.
    • Sledger
    • By Sledger 9th Jan 19, 8:23 PM
    • 94 Posts
    • 29 Thanks
    Sledger
    On a separate issue all these previous posts about 8% to good to be true, I am with Lending Crowd and can select who I invest with and check the security assets normally something like a chicken farm on land in case of default or the Director puts up his house as security. I average over 8% and no defaults as yet just a few late payments. I thought LCF were lending to real companies with solid assets as the Ernst Young audit implies. To loan to themselves appears to be a serious violation and how come Ernst Young never picked this up.
    • jimjames
    • By jimjames 9th Jan 19, 8:46 PM
    • 13,234 Posts
    • 12,297 Thanks
    jimjames
    1), and 2). A little bit of misleading advertising is of no consequence if your business model is sound
    Originally posted by Sledger
    Personally I don't see selling bonds to unwitting investors thinking they have security of capital and are placing their life savings into a scheme where they could lose 100% of their money counts as being "A little bit of misleading advertising" and "is of no consequence".

    Even if it's not fraudulent you can still lose all your money with LCF. Investing 25% of the bonds into oil & gas exploration is highly risky, other money was invested in timeshares. Have you seen the oil price over the last 5 years?

    https://www.macrotrends.net/1369/crude-oil-price-history-chart
    Remember the saying: if it looks too good to be true it almost certainly is.
    • masonic
    • By masonic 10th Jan 19, 5:48 AM
    • 11,774 Posts
    • 9,405 Thanks
    masonic
    On a separate issue all these previous posts about 8% to good to be true, I am with Lending Crowd and can select who I invest with and check the security assets normally something like a chicken farm on land in case of default or the Director puts up his house as security. I average over 8% and no defaults as yet just a few late payments. I thought LCF were lending to real companies with solid assets as the Ernst Young audit implies. To loan to themselves appears to be a serious violation and how come Ernst Young never picked this up.
    Originally posted by Sledger
    It's a very different situation when you are lending directly to actual borrowers and can verify charges taken out against assets, and are provided with valuations, which you can critically evaluate vs. lending to a small company who tells you it is re-lending the money, but refuses to disclose any details.

    Having said that, you should expect there to be defaults in the future at LC, and it is likely that some of those defaults will lead to a loss of the majority of your capital, as has been seen on most other P2P platforms offering similar rates. It's just a matter of time.
    • Sledger
    • By Sledger 10th Jan 19, 10:08 AM
    • 94 Posts
    • 29 Thanks
    Sledger
    so where is the bulk of the 250 million gone.it has to be somewhere and surely FCA should be sourcing it . Maybe FCA or our authorities should set up a 1* sort of Ritz Carlton in Bodmin Moor, round them all up, keep them isolated and detained for months until the money comes back. All those Princes coughed up and keep very quite about the regime and have not heard any western criticism to this method of retrieving corrupt money .
    • masonic
    • By masonic 10th Jan 19, 11:41 AM
    • 11,774 Posts
    • 9,405 Thanks
    masonic
    so where is the bulk of the 250 million gone.it has to be somewhere and surely FCA should be sourcing it . Maybe FCA or our authorities should set up a 1* sort of Ritz Carlton in Bodmin Moor, round them all up, keep them isolated and detained for months until the money comes back. All those Princes coughed up and keep very quite about the regime and have not heard any western criticism to this method of retrieving corrupt money .
    Originally posted by Sledger
    It's still very early for rounding people up. However, it wouldn't be surprising if one of the work streams being followed by the FCA is the potential for criminal charges to be filed.

    If their investigations demonstrate the money and/or assets supposedly used as security have disappeared, then LCF will be placed in Administration, and hopefully the FCA will appoint Administrators / Liquidators, although this is typically the privilege of the largest creditor. One of the jobs will be to follow the trail and determine whether or not the directors of the company acted in the best interest of the creditors, and if not then a case can be made for lifting the veil of limited liability, which would see the directors personally liable. Of course, they could continue to frustrate the process by disposing of their personal assets. The question of whether such action could be extended to the web of companies that were lent the money remains to be answered. I wouldn't expect this to be a swift process, and no doubt every effort to frustrate the process will be taken.
    • Malthusian
    • By Malthusian 10th Jan 19, 11:55 AM
    • 5,940 Posts
    • 9,821 Thanks
    Malthusian
    It's still very early for rounding people up. However, it wouldn't be surprising if one of the work streams being followed by the FCA is the potential for criminal charges to be filed.
    Originally posted by masonic
    I don't know about surprising but it would be unusual.

    Issuing misleading financial promotions is in itself not a crime, it's a regulatory breach.

    Even if LCF eventually collapses and loses investors' money, running a failed investment is also in itself not a crime.

    As Masonic suggests, finding out where money is gone in an unregulated investment is not usually the FCA's problem. The clue is in the word "unregulated". This investigation started with the LCF's marketing materials, which are regulated, and - all speculation aside - it could yet finish with them.

    I would not be surprised if the FCA eventually washed its hands of it and left investors twisting in the wind as they did with Park First. Finding out where the money went would be (as Masonic alludes to) the job of an insolvency practitioner in the first instance.
    • bail-in
    • By bail-in 10th Jan 19, 12:10 PM
    • 150 Posts
    • 56 Thanks
    bail-in
    Wholesale Lending - the LCF short term asset secured commercial lending business model?
    A wholesaler is an intermediary entity in the distribution channel that buys in bulk and sells to resellers rather than to consumers. In its simplest form, a distributor performs a similar role but often provides more complex services. Distributors and wholesalers often work together as channel partners. Wholesaling has also become a retail business model. Note too, that while the most common type of wholesaling is between manufacturers and retailers, an increasing number of wholesalers sell to other wholesalers. A wholesaler may also sell materials to make goods, buying them from one manufacturer and selling them to another.

    The LCF commercial lending certainly looks like the short term asset secured Wholesale Lending model. But then the discussions here in this daniel80 LCF thread disclosing the past shared company directorships and no corporate activity by those lenders borrowing from LCF is suspect in this Wholesale Lending model of LCF. However, the interest to bondholders was paid and principal was repaid in full at end of term when requested. So that income must be seen, at least in the previous years' Annual Accounts.

    LCF describe themselves as a direct lender which does not appear to be accurate.

    From Wikipedia, the free encyclopedia. Direct lending is a form of corporate debt provision in which lenders other than banks make loans to companies without intermediaries such as an investment bank, a broker or a private equity firm.

    In LCF lending there is no direct lending but rather a wholesale lending intermediary network of director related lenders of the LCF commercial loans. Perhaps the illusive lending team they keep referring to. So the lending flow chart is: primary wholesale lender > intermediary lenders > commercial borrowers. This is NOT the commercial lending business structure touted to investors and is quite different from the LCF flow chart of the lending business.

    Also refer to:
    https://forums.moneysavingexpert.com/showthread.php?p=75314883&utm_source=MSE_FS&utm_me dium=Email&utm_term=08-Jan-19#627

    More info in the links below about non-bank wholesale lending (commercial not consumer):

    https://www.bridgingloans.co.uk/news/introduction-wholesale-lending/

    http://www.nortonrosefulbright.com/knowledge/publications/125777/non-bank-lending-focus-on-the-uk-market

    http://www.cmgfi.com/news/read/what-is-wholesale-lending?channel=corporate

    https://www.shawbrook.co.uk/business/finance/structured-finance/wholesale-finance/

    https://www.fca.org.uk/enforcement-annual-performance-account-2015-16/4-wholesale-conduct

    https://www.investec.com/en_gb/intermediary-lending/finance/wholesale-lending.html

    https://www.thisismoney.co.uk/money/news/article-4191998/Peer-peer-lending-risky-private-individuals.html

    https://ftalphaville.ft.com/2017/02/08/2184050/an-end-to-the-nascent-p2p-wholesale-lending-market/

    https://www.ratesetter.com/blog/article/an-update-on-wholesale-lending
    Last edited by bail-in; 18-01-2019 at 8:20 AM.
    • jimjames
    • By jimjames 10th Jan 19, 12:34 PM
    • 13,234 Posts
    • 12,297 Thanks
    jimjames
    so where is the bulk of the 250 million gone.it has to be somewhere and surely FCA should be sourcing it
    Originally posted by Sledger
    Well I've identified nearly £100 million of it and I'm just an average Joe investor so I suspect that FCA with access to the full books would know.

    You do realise though that it's an unregulated investment so it's nothing to do with FCA to actually recover the money?
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Malthusian
    • By Malthusian 10th Jan 19, 1:15 PM
    • 5,940 Posts
    • 9,821 Thanks
    Malthusian
    Well I've identified nearly £100 million of it
    Originally posted by jimjames
    No offence to your detective skills but no you haven't. You identified that £100m went from LCF into various companies in the LCF network at some point, possibly several years ago. What investors want to know is where that £100m is now. Only LCF's directors know the answer to that.
    • jimjames
    • By jimjames 10th Jan 19, 3:12 PM
    • 13,234 Posts
    • 12,297 Thanks
    jimjames
    No offence to your detective skills but no you haven't. You identified that £100m went from LCF into various companies in the LCF network at some point, possibly several years ago. What investors want to know is where that £100m is now. Only LCF's directors know the answer to that.
    Originally posted by Malthusian
    Absolutely. Yes, sorry if that wasn't clear I was working on the "went" question - the initial destination of approx £100m was shown in the accounts. Any work involving historic accounts is clearly by it's nature looking at the past and the position could definitely have changed by now. The fact that the accounts have been repeatedly delayed could suggest that it could be significantly different.

    In terms of where the money has gone, it's also possible that 8% pa of the funds has already been returned to investors as their annual interest. They just wouldn't know if it was their capital being returned or money received as interest from loans.
    Last edited by jimjames; 10-01-2019 at 7:07 PM.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • masonic
    • By masonic 10th Jan 19, 6:00 PM
    • 11,774 Posts
    • 9,405 Thanks
    masonic
    I don't know about surprising but it would be unusual.

    Issuing misleading financial promotions is in itself not a crime, it's a regulatory breach.

    Even if LCF eventually collapses and loses investors' money, running a failed investment is also in itself not a crime.

    As Masonic suggests, finding out where money is gone in an unregulated investment is not usually the FCA's problem. The clue is in the word "unregulated". This investigation started with the LCF's marketing materials, which are regulated, and - all speculation aside - it could yet finish with them.

    I would not be surprised if the FCA eventually washed its hands of it and left investors twisting in the wind as they did with Park First. Finding out where the money went would be (as Masonic alludes to) the job of an insolvency practitioner in the first instance.
    Originally posted by Malthusian
    I agree with all of that. The lending business is, if I understand correctly, regulated. So there is potential for the FCA to look into that, and if it turns out to be a means of laundering and stealing investor money, then that would be a crime - not that pursuing criminal charges would help rescue investor money.
    • masonic
    • By masonic 10th Jan 19, 6:09 PM
    • 11,774 Posts
    • 9,405 Thanks
    masonic
    In terms of where the money has gone, it's also possible that 8% pa of the funds has already been returned to investors as their annual interest. They just wouldn't know if it it was their capital being returned or money received as interest from loans.
    Originally posted by jimjames
    and on the "LIFO" basis the remaining debt might be considered by a court to be partially irrecoverable to the extent that monies have been repaid.
    • Aretnap
    • By Aretnap 10th Jan 19, 9:01 PM
    • 3,305 Posts
    • 2,898 Thanks
    Aretnap
    Here's someone else who has some of LC&F's money - Atlantic Petroleum. Or at least it has some of London Oil and Gas's money, most of which is borrowed from LC&F. Atlantic Petroleum is a Faroese company, listed in Oslo and Copenhagen, with a market cap of 24 million Danish Krone (about £2 million). As of LOG's last accounts (made up to May 2017) they'd advanced just under £1 million to Atlantic, out of a potential £8 million made available.

    Doubtless a high risk type of company to invest in (Exhibit A - Atlantic's share price over 5 years; the company looks to have been in a "distressed" state at the time of the loan), but interesting that at least some of the money is being lent out, albeit second hand, to actual listed companies. How much benefit LC&F's bondholders eventually get from that remains to be seen of course...
    Last edited by Aretnap; 10-01-2019 at 9:12 PM.
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