Mini-bond trial: London Capital & Finance administrators legal battle against former executives commences

The administrators of London Capital and Finance (LCF) civil legal proceedings kick off today against the former executives of the company, including its former CEO Michael ‘Andy’ Thomson.

The investment company collapsed back in 2019 after an intervention by the Financial Conduct Authority (FCA) following a discovery that LCF was marketing unregulated mini-bonds along with misleading promises of returns of up to 8 per cent.

The company sold 16,706 bonds to 11,625 bondholders, who collectively invested a total amount of £237,207,497.

The collapse caused a scandal, leading to several investigations including by the Treasury and the Financial Reporting Council. The Serious Fraud Office (SFO) also launched a criminal investigation into the individuals associated with LCF, that probe is still ongoing.

The SFO did secured a 10 month sentence (suspended for two years) against Thomson in May 2023 after he breached a restraint order imposed on his bank account. The anti-fraud agency uncovered that Thomson hid £95,000 after he received the order, as he paid it into his wife’s account.

While just last week it was announced that the Financial Conduct Authority (FCA) fined and banned LCF’s former compliance chief Floris Jakobus Huisamen.

Back in 2019, the administrators report said that millions of pounds of money invested in LCF flowed through the accounts of four men.

Finbarr O’Connell, Adam Stephens, Colin Hardman and Lane Bednash from Evelyn Partners are the joint administrators of the company. They are the claimants in the civil lawsuit against the company’s former executives.

They are being represented by partners Mike Stubbs and Barry Coffey of City-based law firm Mishcon de Reya. The case was filed in August 2020 and was originally filed against 15 defendants, however, since the case was launched, they have settled with six of those 15.

The claimants have settled their claim with defendants; Francis Starkie, Martin Ruscoe, Eric Bosshard, Robin Hudson, Charles Hendry and Elten Barker. These six are no longer involved and will not be at the trial.

Additionally, one of the defendants, Spencer Golding, was disbarred from defending himself in this trial. City A.M. understands that the claimants are still presenting their case against him to the judge, but after a court ruling to disbar him, he can’t defend himself at this trial.

According to their claim form, they argue that “LCF’s business was carried on with intent to defraud bondholders. Monies belonging to LCF that had been paid to LCF by bondholders were misappropriated and paid to the first to tenth defendants.”

The trial begins today at the Rolls Building, three weeks after the case was originally scheduled. The case will be presented to Mr Justice Miles and is expected to last for 20 weeks, bringing the conclusion of the trial to be mid-summer, just before the High Court closes for the holidays.