FNG Exclusive… FNG has learned that Retail FX and CFDs broker London Capital Group Ltd (commonly referred to as LCG, at website lcg.com) has had severe restrictions put on its FCA license, and on its operations.

LCG is run out of London by CEO Dave Worsfold and Managing Director Matt Basi. The company is owned by Switzerland based neobroker / neobank FlowBank SA, which was founded by former LCG CEO Charles-Henri Sabet. About a year ago LCG changed its business model, effectively becoming an introducing broker to (former) rival and leading online broker IG Group (LON:IGG), as was also exclusively reported at the time here at FNG.

And about two weeks ago, LCG’s parent company FlowBank was forced into bankruptcy and liquidation by Swiss financial regulator FINMA (although as we reported yesterday, FlowBank’s shareholders are lining up to fight FINMA on the issue).

That makes LCG an asset of a bankrupt and liquidating company. Apparently at the Swiss authorities’ request, the FCA has imposed restrictions on LCG’s license and operations to ensure that any value in LCG can be repatriated to FlowBank, to help pay off creditors at FlowBank.

LCG also runs an offshore entity in the Bahamas, LCG Capital Markets Limited, which operates from the same lcg.com website. When visiting the lcg.com website “offshore”, no restrictions appear to be in place at the LCG Bahamas entity at this stage.

The restrictions of LCG’s FCA license apparently include:

Restriction on regulated activities and onboarding. LCG cannot onboard any new clients, or introduce any person to a firm it acts as Introducing Broker for. LCG also cannot accept any new client money. The firm may not carry out any “regulated activity” for which it holds permission, except in relation to existing clients.

Assets restriction. LCG cannot dispose of or diminish the value of any of its own assets, and any funds it holds for its customers, whether in the UK or elsewhere.

Based on a message LCG has circulated to its clients, clients are requested to be in touch with the company to withdraw their funds. The withdrawal of LCG client funds held in designated client fund accounts is apparently not restricted by the FCA.

LCG now shows a notice message at the top of its website, which reads as follows:

Important notice: On Thursday June 13th, London Capital Group Ltd.’s (LCG) parent company, FlowBank, entered into bankruptcy proceedings after intervention from the Swiss regulator, FINMA. Consequently, LCG have engaged an independent firm to establish the current financial status of the UK entity. Whilst this assessment is ongoing, LCG has applied to the FCA to place certain restrictions on our regulatory permissions. Details of the restrictions can be viewed on the FCA website here.

As part of this voluntary arrangement, we are not currently conducting new regulated activity. If you are a legacy client who continues to hold balances directly with LCG, you should contact customer services on 02074567020 or by email to customerservices.uk@lcg.com to arrange the withdrawal of your funds.  Your funds continue to be held in ring-fenced, designated client money accounts.

If you are an existing client of LCG’s Introducing Broker/Partnership business holding an account with one of our Partner firms, you are unimpacted by these developments – your account continues to operate as normal. If you have any questions, please contact our Relationship Management team on 02074567575.

We will continue to follow this story as it unfolds.