London Capital & Finance fiasco

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https://www.bbc.co.uk/news/business-47760182

I've been reading about this fiasco quite a bit over the last few weeks.

A quick summary for those who are not familiar with the story:

Thousands of people who invested in a high-risk bond scheme marketed as a "Fixed Rate ISA" fear they have lost everything after the company collapsed.

London Capital & Finance (LCF), now in administration, took £236m following a marketing campaign that is now under investigation for mis-selling.

Many were first-time investors - inheritance recipients, small business owners or newly retired.

LCF did not have FSCS protection for these "Fixed Rate ISA's" that they were offering.

The administrators who were appointed to LCF have released a report stating the following:

• There were a number of "highly suspicious transactions" involving a "small group of connected people" which led to large sums of investors' money ending up in their "personal possession or control"
• A large number of borrowers don't appear to have sufficient assets to pay back LCF investors
• Some transactions were "highly suspicious" or had "no commercial benefit" to investors
• Investors' money was loaned to a complex web of companies, many of which were controlled by people involved in LCF
• A quarter of all the money invested was paid straight to LCF's marketing company Surge

It really doesn't take a genius to work out that a number of high up people in LCF has effectively stolen money from their investors.

Surely the courts should be freezing the assets of these suspected people before they blow the lot on luxury items and make it impossible for any money to be recovered.

Frankly if they're proven guilty of fraudulently taking this money from their investors, they should be personally liable to pay every penny back, even if that bankrupts them.

Just seems shocking that people/companies can get away with things like this these days.

 

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This could have been another of the avenues to siphon money.

I'd suspect this is definitely one avenue of siphoning money. 25% of £236million is £59million.

A quick bit of research from 2017 (Nielsen data) shows what the following companies spent on advertising:
- Tesco £89.5mil
- Samsung £66.6mil
- Aldi £22mil
- Virgin Media £31mil
- Vodafone £58.6mil
- Asda £62mil
- Sainsburys £48.5mil

(https://www.campaignlive.co.uk/arti...der-fmcg-giant-cuts-traditional-spend/1462730)

Looking at that above list, i could quite easily say that i've seen many adverts from each of the above companies.

To think that LCF spent on par with Vodafone and Asda, yet i don't think i'd ever heard of them prior to this fiasco.

 

[Semple]

The money went to a firm called Surge, which on the face of it is a legit business.

Hmm i think that's questionable. For a company that billed £60million for some advertising, their website looks a bit... empty.

Most advertising companies pride themselves on testimonials from clients they've done work for. Surge's portfolio page is completely blank.

It may well be perfectly legit business, but it definitely looks suspicious.