London Capital & Finance fiasco

[LizHL]

Hi all, have joined this forum , as seems a lot of intelligent people on here, and just need to talk about this.

My mum found out that she had lost 70k in this fiasco, at 86 years old, and did not tell us. I found out after her death in July 2019. The letter arrived in March, and then she started falling, became confused, it happened at the same time as this happened. I say LC & F caused her sudden demise, and will never change that opinion.

My mum had worked for national savings for over 30 years, and had a lot of other 'safe' investments. She would move money around on maturity, and unfortunately this time she got sucked in. She did not do online transfers, just had a laptop to look things up, but was so pleased when she rang them in August 2018, unbeknown to us what she was doing, and they would accept a cheque for 70k, through the post!!!

My poor son remembers posting that cheque.

The reason I object to a fool and his money..., is because that lady was no fool with money, but died keeping this to herself, ashamed

Miss you mum, and hope those criminals are in a horrible prison for life. Doubt it though, hey. Never works out that way.

 

[sigma]

Did anyone ever get prosecuted?

 

[alex20000]

Looks like the case is going to continue.

https://www.independent.co.uk/news/...e-compensation-court-ruling-fscs-b420651.html

Terrible situation for all involved.

Please make sure you do your due diligence if you're financially savvy, even so, consulting a professional isn't always a bad idea.

 

[Theophany]

It was an absolute scam and it's a travesty that the FSCS has decided to cover peoples' losses in it.

 

[Angilion]

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.

Looks to me like they've learned their lessons from the USA film industry. Having one company you own vastly overcharge another company you own in order to siphon off money is a textbook piece of Hollywood accounting.

I'm surprised Virgin Media is only spending £31M a year on advertising. I see more advertising from them than any other company. Maybe I'm considered a prime target. I could have built a shed from the junk mail advertising I've had from Virgin Media.


I'm not sure why people would bother with running a shady gambling scheme labelled as investment when it's legal to run a gambling scheme labelled as investment as long as you put a quick disclaimer on it. I see no end of adverts online for gambling schemes labelled as investment and every one of them has a quick disclaimer stating that most people using the scheme lose money (almost always ~75%).

 

[dowie]

My mum found out that she had lost 70k in this fiasco, at 86 years old, and did not tell us. I found out after her death in July 2019. The letter arrived in March, and then she started falling, became confused, it happened at the same time as this happened. I say LC & F caused her sudden demise, and will never change that opinion..

Sorry to hear of that, even the scummiest of the AIM/Reg-S stockbrokers in the early 00s wouldn't touch over 80 year olds, sounds like the boiler room types at this place went all out. As for sending a cheque, that's not particularly remarkable tbh... Having marketing material sent out to people and receiving a cheque in the post from them as outdated as it sounds has continued as an option for some years.

I'm surprised Virgin Media is only spending £31M a year on advertising. I see more advertising from them than any other company. Maybe I'm considered a prime target. I could have built a shed from the junk mail advertising I've had from Virgin Media.

I think advertising and marketing are being conflated here, in this case there is an obvious possible explanation for both you not hearing about them and that sort of sum being spent on "marketing":

I think marketing is being conflated with advertising here - no one has claimed that £59 million has been spent on advertising AFAIK. Marketing can also involve a team of salespeople and if you're talking about financial salespeople who'd perhaps otherwise be at home running a boiler room scam, land banking or coloured diamonds etc.. these are people who can easily earn mid six figures if not 7 figures for the top salespeople... get a whole team of them in (given the scale of this scam) and that is a few million a year spend on salaries/commissions in order to hard sell this stuff via cold calling... (or perhaps not technically cold calling if someone has ticked some marketing box somewhere but more or less the same effect from the perspective of the consumer).

I'm not sure why people would bother with running a shady gambling scheme labelled as investment when it's legal to run a gambling scheme labelled as investment as long as you put a quick disclaimer on it. I see no end of adverts online for gambling schemes labelled as investment and every one of them has a quick disclaimer stating that most people using the scheme lose money (almost always ~75%).

I suspect you're referring to spread betting, a company executing individual trades or bets where the customer is choosing the investments or bets is rather a different business to a fund management business that purports to invest on the customers behalf.

There are plenty of reasons why people would do this - given they're morally dubious individuals, firstly setting up a completely different type of business like a spread betting firm isn't very straightforward, you might as well ask why don't they set up a bank if they like money, these days if you want to do either you're essentially looking at a tech focused startup aiming to "disrupt" the existing large players in that area. They probably don't have the skillset or foresight to add anything there.

But the actual business these scammers were trying to LARP would be a fund management company, arguably easier to launch than an SB firm (or indeed a bank), the reason for people like them not doing this legitimately is perhaps a simple one; they'd not be any good at it... if they were then it's a no brainer, successful fund managers are among the richest people in the world... Unsucessfull start up fund managers fail frequently and have to close. Scammers like these are scammers because they wouldn't succeed otherwise but unlike the non-scammy people taking a shot they still get to make some $$$ from scamming.

 

[Angilion]

[..] I suspect you're referring to spread betting, a company executing individual trades or bets where the customer is choosing the investments or bets is rather a different business to a fund management business that purports to invest on the customers behalf. [..]

I don't know what it is. I just see adverts for apps/services in which the advert goes on about making easy money as if it's a certain thing while a mandatory text box appears for the minimum allowed amount of time explaining that it's actually a wild gamble and x% of people who use the app/service lose money, where x is a high proportion. The best one I've noticed had 74.6% of people who used it losing money. So it's a gambling scheme labelled as investment. Some of them offer a fully automated service, where you give the business your money and they gamble ("invest") it for you. So those are a business purporting to invest on the customers behalf, although I suspect that they're legally different to this particular "investment" scheme. Not really different, but legally different.

 

[dowie]

I don't know what it is. I just see adverts for apps/services in which the advert goes on about making easy money as if it's a certain thing while a mandatory text box appears for the minimum allowed amount of time explaining that it's actually a wild gamble and x% of people who use the app/service lose money, where x is a high proportion. The best one I've noticed had 74.6% of people who used it losing money. So it's a gambling scheme labelled as investment. Some of them offer a fully automated service, where you give the business your money and they gamble ("invest") it for you. So those are a business purporting to invest on the customers behalf, although I suspect that they're legally different to this particular "investment" scheme. Not really different, but legally different.

Can you link to what you're referring to. A business actually proposing a scheme whereby they invest on your behalf and declare that they will lose you money is a bit dodgy to say the least and likely reliant on similar dubious salespeople.

A spread betting firm though isn't offering any scheme as such but is a different type of business as per the previous post, I think that might be what is being conflated here.

 

[Russinating]

Yeah I think Angilion is getting his wires crossed there, in that that type of disclaimer would be for self-invest products. Something like eToro springs to mind; when it's plastered on football stadium boards you know you're in trouble. They're homepage states "71% of retail investor accounts lose money when trading CFDs with this provider" bang at the top with regards to CFDs...

 

[Angilion]

Can you link to what you're referring to. A business actually proposing a scheme whereby they invest on your behalf and declare that they will lose you money is a bit dodgy to say the least and likely reliant on similar dubious salespeople.

A spread betting firm though isn't offering any scheme as such but is a different type of business as per the previous post, I think that might be what is being conflated here.

I can't link to them because they're adverts inserted into videos I've watched on Youtube. I could give you a link to the videos, but that wouldn't necessarily mean the same adverts. The sales pitch is definitely dubious to put it politely. I would use words like "misleading" and "deceitful".

As I said, I don't know the details of how the "investing" works. It's obviously gambling. I don't gamble and even if I did I wouldn't gamble at those odds, so I've never been interested enough to seek out the details. I see the adverts only because I allow Youtube to advertise at me in order for the content creators to get some money for their work. That seems fair to me, since I don't pay them directly with money.

My guess is that these businesses are offering a scheme whereby they "invest" the money on your behalf through automation via their app but legally the punter is the one doing the "investing". Not really different, but legally different. The business only declares that a large majority of their customers lose money because they're legally required to do so. The ads themelves are solely about how the product is a magic money tree that anyone can grow with no time or work or knowledge, dressed up with a veneer of sophistication, respectability and precision.

Yeah I think Angilion is getting his wires crossed there, in that that type of disclaimer would be for self-invest products. Something like eToro springs to mind; when it's plastered on football stadium boards you know you're in trouble. They're homepage states "71% of retail investor accounts lose money when trading CFDs with this provider" bang at the top with regards to CFDs...

CFDs rings a bell. I'm not getting my wires crossed. I've said several times that I don't know what the details of the gambling are, so in the context of the analogy I don't even know where the metaphorical wires are going. The key point is that you give these businesses your money and their software gambles it for you and 70+% of punters lose money. The details of the "wiring" matter legally, but they don't change the results.

The legality was my original point - if a business can do it legally, why do it illegally?

 

[Theophany]

The legality was my original point - if a business can do it legally, why do it illegally?

What are you rambling on about?

LCF were selling minibonds and their salespeople were masquerading as qualified financial advisers, which they were not. The minibonds were ripped off by the directors of LCF who used investor money to fund lavish lifestyles by loaning their own companies money.

Because investors were misled that the sales pitch was 'advice' and did no due diligence, the FSCS has decided that it will compensate investors by levying an additional fee on financial advice firms who can ill-afford the currently punitive levels of FCA fees, FCSC levies and professional indemnity insurance.

This was a garden variety fraud. It has nothing to do with gambling or whatever unrelated nonsense you've Kramered into the thread in with.

 

[dowie]

I can't link to them because they're adverts inserted into videos I've watched on Youtube. I could give you a link to the videos, but that wouldn't necessarily mean the same adverts. The sales pitch is definitely dubious to put it politely. I would use words like "misleading" and "deceitful".
[...]
CFDs rings a bell. I'm not getting my wires crossed. I've said several times that I don't know what the details of the gambling are, so in the context of the analogy I don't even know where the metaphorical wires are going. The key point is that you give these businesses your money and their software gambles it for you and 70+% of punters lose money. The details of the "wiring" matter legally, but they don't change the results.

This still sounds very muddled, what is the company called?

A company managing a fund would publish the returns of that fund not what % of clients lose money. That's rather meaningless - If the fund tanks then all the clients lose money, not some % of them!

It's spread betting/CFD firms where the clients make their own investment decisions that will post standard warnings that X% of clients lose money.

A third possibility is that there are also the few advisory CFD firms, which seem like an excuse for churning client accounts but they're not managing your money, they're dodgy salespeople trying to get you to place a bunch of trades via them.

I guess also there are platforms where you can shadow other "traders" and just deposit funds to follow their trades/bets.

If you're making a comparison to the business this thread is concerned with then it's a company purporting to manage your money, and the reason why they'd perhaps not try to do this legally is quite simple, they probably can't, if they could they would as a successful fund management company has potential to make way, way more than these scammers.

It might well be the case that whichever company this is you've seen advertised is acting illegally too so the question you're asking re: why not engage in this other legal activity instead might well be a bit flawed for that reason rather than the activity being a different kind of business.

 

[Theophany]

It's nonsense. He's talking about CFD betting and totally misunderstanding it thinking it's some form of managed investment.

 

[Orangeade]

CFD funds are borderline predatory especially in their offering of leverage. The ESMA rules of 50% didn't help either so typically lots of people find their positions liquidated rather quickly. And there are definitely concerns in my opinion about their "best execution".

All in all people should stay away without reasonable knowledge, a defined plan and deep pockets.

 

[Angilion]

This still sounds very muddled, what is the company called?

No idea. I've seen a number of different ads and paid no attention to which company was running the "investment" since they were all obviously dodgy deals with great advertising. If it wasn't for the mandatory disclosure of losses, they'd look like a great idea.

A company managing a fund would publish the returns of that fund not what % of clients lose money. That's rather meaningless - If the fund tanks then all the clients lose money, not some % of them!

It's spread betting/CFD firms where the clients make their own investment decisions that will post standard warnings that X% of clients lose money.

A third possibility is that there are also the few advisory CFD firms, which seem like an excuse for churning client accounts but they're not managing your money, they're dodgy salespeople trying to get you to place a bunch of trades via them.

Through their app, which apparently (according to the adverts) handles the trading automatically. So who's really managing (or, more accurately, gambling) the money? Not who's doing it in the eyes of the law. Who's really doing it.

I guess also there are platforms where you can shadow other "traders" and just deposit funds to follow their trades/bets.

If you're making a comparison to the business this thread is concerned with then it's a company purporting to manage your money, and the reason why they'd perhaps not try to do this legally is quite simple, they probably can't, if they could they would as a successful fund management company has potential to make way, way more than these scammers.

It seems that I've not got my question across, so I'll try again.

I'm not making a comparison between the fraud that the business in this thread is accused of and successful fund management companies. I'm making a comparison between the business in this thread and the businesses I've seen advertised. Both make money from portraying gambling at rather dubious odds as investment. Both claim to offer a service that will skew the odds of the gambling in your favour but doesn't actually do so. One is legal. The other is illegal and will inevitably come to light. So why would people bother with the illegal method of obtaining money? It's riskier. Or are they likely to get away with it and keep the money even if they did set out from the start to commit fraud? So my guess is that they started with the intention of being a successful fund management company, failed and then switched to fraud. Or that they're arrogant and/or stupid enough to have gone for a risky fraud from the start.

It might well be the case that whichever company this is you've seen advertised is acting illegally too so the question you're asking re: why not engage in this other legal activity instead might well be a bit flawed for that reason rather than the activity being a different kind of business.

That's a good point.

It's nonsense. He's talking about CFD betting and totally misunderstanding it thinking it's some form of managed investment.

Dowie is being reasonable.

You're being an arse and making stuff up.

Please read Dowie's posts and try to understand the difference. I'd ask you to read my posts, but you've already amply demonstrated your unwillingness to do so.

 

[Theophany]

Dowie is being reasonable.

You're being an arse and making stuff up.

Please read Dowie's posts and try to understand the difference. I'd ask you to read my posts, but you've already amply demonstrated your unwillingness to do so.

I haven't made anything up. As per your above post:

I'm not making a comparison between the fraud that the business in this thread is accused of and successful fund management companies. I'm making a comparison between the business in this thread and the businesses I've seen advertised. Both make money from portraying gambling at rather dubious odds as investment. Both claim to offer a service that will skew the odds of the gambling in your favour but doesn't actually do so. One is legal. The other is illegal and will inevitably come to light. So why would people bother with the illegal method of obtaining money? It's riskier. Or are they likely to get away with it and keep the money even if they did set out from the start to commit fraud? So my guess is that they started with the intention of being a successful fund management company, failed and then switched to fraud. Or that they're arrogant and/or stupid enough to have gone for a risky fraud from the start.

It's a specious comparison. It wasn't gambling nor was it portrayed or advertised as such, it was a fraud from the outset and one that is now being paid for by the industry for no good reason.

 

[LizHL]

Did anyone ever get prosecuted?

Not yet

 

[LizHL]

Hi all, have joined this forum , as seems a lot of intelligent people on here, and just need to talk about this.

My mum found out that she had lost 70k in this fiasco, at 86 years old, and did not tell us. I found out after her death in July 2019. The letter arrived in March, and then she started falling, became confused, it happened at the same time as this happened. I say LC & F caused her sudden demise, and will never change that opinion.

My mum had worked for national savings for over 30 years, and had a lot of other 'safe' investments. She would move money around on maturity, and unfortunately this time she got sucked in. She did not do online transfers, just had a laptop to look things up, but was so pleased when she rang them in August 2018, unbeknown to us what she was doing, and they would accept a cheque for 70k, through the post!!!

My poor son remembers posting that cheque.

The reason I object to a fool and his money..., is because that lady was no fool with money, but died keeping this to herself, ashamed

Miss you mum, and hope those criminals are in a horrible prison for life. Doubt it though, hey. Never works out that way.

 

[taB]

At 86 years old it would seem sensible to have set up a lasting power of attorney for your mother, especially if she had such a large amount of liquid funds. No matter what her previous experience with money.

The reference to your son is weird. If he knew he was posting a £70k cheque, wouldn't he have thought it odd and spoken to you?

 

[Theophany]

At 86 years old it would seem sensible to have set up a lasting power of attorney for your mother, especially if she had such a large amount of liquid funds. No matter what her previous experience with money.

The reference to your son is weird. If he knew he was posting a £70k cheque, wouldn't he have thought it odd and spoken to you?

Please don't feel obliged to post in every thread you open, tia.

@LizHL I appreciate posting on a forum is often like screaming into the ether. This whole situation is an absolute unmitigated mess and just one more example of the 'regulator's deriliction of duty. Feel free to send me a trust message if you'd like a sympathetic ear and perhaps some guidance on your best avenues for recourse.