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The FCA has announced that there will be an independent investigation into the failure of London Capital & Finance

By David Harris (UK) & Rachel McDonnell (UK) on April 4, 2019
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On 1 April 2019, the FCA announced that there will be an independent investigation into the failure of London Capital & Finance (LC&F).

The FCA stated that the investigation should cover:

  • whether the existing regulatory system adequately protects retail purchasers of mini-bonds from unacceptable levels of harm; and
  • the FCA’s supervision of LC&F.

LC&F was the issuer of mini-bonds which it stated it used to make loans to corporate borrowers to provide capital for further investment.

On 10 December 2018, the FCA directed LC&F to withdraw its promotional material immediately, on the basis that the material was misleading, not fair and unclear. On 13 December 2018, the FCA imposed additional requirements on LC&F including: a) not to dispose of or deal with its assets save in limited circumstances; b) to cease conducting all regulated activity; and c) not to communicate any financial promotions. Those requirements were imposed pursuant to a voluntary application by LC&F.

On 30 January 2019, LC&F entered administration and on 18 March 2019, the Serious Fraud Office announced that they had commenced an investigation into various individuals associated with LC&F.

The FCA believes that approximately 14,000 customers invested in LC&F’s bonds.

Information about the detailed terms of reference of the investigation and the identity of the independent reviewer will be published when it’s available.

Photo of David Harris (UK) David Harris (UK)
Read more about David Harris (UK)Email
Photo of Rachel McDonnell (UK) Rachel McDonnell (UK)
Read more about Rachel McDonnell (UK)Email
  • Posted in:
    Financial, International
  • Blog:
    Financial services: Regulation tomorrow
  • Organization:
    Norton Rose Fulbright
  • Article: View Original Source

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