The UK Serious Fraud Office (SFO) has provided a brief update on its investigation into failed London Capital & Finance Plc (LCF).
Let’s recall that, the SFO, working in conjunction with the Financial Conduct Authority (FCA), is investigating individuals associated with LCF. The conduct relates to investments offered between 2013 and 2018. These investments were sold through Sales Aid Finance (England) Ltd (SAFE), which changed its name to London Capital & Finance Ltd in July 2015.
On March 4, 2019, four individuals were arrested in the Kent and Sussex areas. All four individuals have been released pending further investigation. On June 19, 2019, a fifth individual was arrested in Sussex and was also released pending further investigation.
On March 5, 2020, and December 15, 2020, two further individuals in the Kent area were interviewed for money laundering in connection with the LCF investigation.
In September 2020, the SFO and FCA asked investors in London Capital & Finance Plc to complete a questionnaire by October 31, 2020 to be considered as a witness. To date (that is, the end of February 2021), the SFO has received over 3,750 completed questionnaires.
The questionnaire will close on 31 March 2021 and no submissions will be possible after this. Any investors who have not yet completed the questionnaire are advised to do so.
The Serious Fraud Office concludes:
“Please note as the SFO continues this lengthy investigation we are unable to provide any further comment at this time”.
The FCA has come under fire in a report authored by Rt. Hon. Dame Elizabeth Gloster DBE in her capacity as the independent investigator into the FCA regulation of LCF.
The Investigation has concluded that the FCA did not discharge its functions in respect of LCF in a manner which enabled it effectively to fulfill its statutory objectives. The investigation concluded that the bondholders, whatever their individual personal circumstances, were entitled to expect, and receive, more protection from the regulatory regime in relation to an FCA-authorised firm (such as LCF) than that which, in fact, was delivered by the FCA.
The root causes of the FCA’s failure to regulate LCF appropriately were significant gaps and weaknesses in the policies and practices implemented by the FCA to analyse the business activities of regulated firms.