Four individuals have been arrested as officers at the Serious Fraud Office launch an investigation into the collapse last week of failed mini-bond manufacturer London Capital & Finance.
The arrests took place in Kent and Sussex in a joint operation between the National Crime Agency, City of London Police, Kent Police, Sussex Police and the South East Regional Organised Crime Unit.
The launch of a SFO probe followed a formal referral by the Financial Conduct Authority to law enforcement. All four individuals have been released pending further investigation.
‘The SFO encourages members of the public who have invested in this scheme over the period 2016 to 2018 to contact us,’ the agency said in a statement.
The collapse of London Capital & Finance (LCF) has left backers facing a £236 million write-down.
The firm, which marketed a ‘fixed rate ISA’ offering yields of up to 8% on asset-backed lending, is the subject of an ongoing FCA probe into mis-selling.
The financial watchdog froze LCF's assets earlier this year and ordered the firm to cease all regulated activity as it conducted its probe. While mini-bonds are outside the scope of FCA regulation, concerns have been flagged about the way it was promoting its products within regulated ISA wrappers.
In a statement last week, the Financial Services Compensation Scheme (FSCS) said the firm’s clients, which amount to around 14,000, would not receive compensation as mini-bonds fall outside its scope.
Smith & Williamson was appointed to administer LCF at the end of January. At the time it said it had been working to contact all account holders 'directly and urgently' and had set up a dedicated contact email and helpline.
LCF is the second high profile collapse of a mini-bond firm in a few months. At the end of 2018, which had around 2,000 customers on its books, was declared in default.
The Serious Fraud Office has appealed for info via a secure reporting form.