London Capital & Finance - Case Update

The directors of collapsed mini-bond seller London Capital & Finance (LCF) ran what is thought to be the largest Ponzi scheme in UK history, the High Court has ruled following a lengthy hearing that spanned five months.

LCF entered administration in January 2019, after the FCA took action against it for marketing its bonds in a misleading, unfair and unclear manner. Finbarr O’Connell, Adam Stephens, Colin Hardman and Henry Shinners of Evelyn Partners were appointed joint administrators.

In December 2020, the joint administrators issued claims against the company’s directors and others seeking to recover c.£237m of bondholders’ funds. The trial commenced in February 2024 and continued until mid-June.

Now, the High Court has finally released its decision, finding that the directors knowingly participated in the fraudulent conduct of LCF's business, operated a Ponzi scheme and misappropriated millions of pounds from the company.

The High Court found that, between 2013 and May 2018, the company operated as a Ponzi scheme whereby the liabilities of existing investors were entirely met from funds invested by new ones, rather than from the resources of the company, without this being explained to the new investors. Although the Court acknowledged that there were some genuine underlying assets, this was in no way inconsistent with the existence of a Ponzi scheme.

The quantum of the personal claims will be determined after further submissions.

The decision can be accessed HERE.

Professionals involved:

• Stephen Robins KC, Andrew Shaw & Daniel Judd of South Square (instructed by Mishcon de Reya) for the joint administrators, Finbarr O’Connell, Adam Stephens, Colin Hardman and Henry Shinners of Evelyn Partners

• Anumrita Dwarka-Gungabissoon of Richard Slade & Partners for Michael Andrew Thomson

• Roy Ledgister of the Convivia Group and Owen Curry of XXIV Old Buildings (instructed by Kingsley Napley) for Paul Careless and Surge Financial