It seems that Smith and Williamson have traced some £20m of LCF bond-holder’s money to four individuals who have benefited from what the FT calls “a number of highly suspicious transactions” (free link). All four men have linked in profiles and – if you can be bothered – you can check out their CVs. One went to posh public school Radley, others come from Tonbridge, they aren’t international jet-setters – they are just men who got rich borrowing money from other people – money they cannot repay.
But normally when you lend people money, you know the basis of the loan. Not here.
LCF “collapsed after the Financial Conduct Authority, the City watchdog, froze its bank accounts and said that its marketing of unregulated mini-bonds as safer Isa savings products was misleading”.
Forgetting all about regulatory perimeters , what seems to have happened here is that these four people borrowed money under false pretences with no intention of paying it back.
Normal people will consider that amounting to theft. That there was a fund involved and complex legal documents legitimising the theft does not make any difference. Common sense tells me that these people need to be taken out of harms way, on parole and the money needs to be retrieved (if that is possible).
Had the money disappeared from a Hatton Garden bank vault, those involved in removing it would be branded as criminals and – when caught – locked up and not given parole.
But because this is white collar theft and because there is a fund involved and because the lawyers are terrified of other lawyers, the four men – Simon Hume Kendall, Spencer Golding, Elton Barker and Andy Thomson will spend Christmas enjoying their ill-gotten gains while the bond-holders face an uncertain future with projections of less than a quarter of their loans being repaid.
Indeed Simon Hume-Kendall has been using his lawyers to get an injunction against Smith and Williamson from tracing the money. Again the FT reports (free link)
The implication is that white-collar crime pays, that the worse that can happen to you, if you are caught with your hand in the till, is a ban on you doing it again and – unlike in America – you will be protected rather than prosecuted by the law.
Why can’t we put these men behind bars?
The regulators are keen to make us aware of the risks of being scammed, we attend hackathon to create games that will help people spot scammers.
Yet we allow those who perpetrate scams such as LCF – their freedom to carry on.
What is needed is a firm hand on a sword to cut through the Gordian knot of legal arguments and apply common sense.
So long as these men can use the law to keep them self, the law is undermined – and with it any trust in regulators or the justice system to protect us.
Why are Smith and Williamson doing the job that the police should be doing and why has the legitimate bond and innovative ISA Ben damaged in response? Bonkers
As you say white collar crime is not treated as seriously as blue collar crime. Too much regulation when legislation and prosecution are what s called for. Regulators aren’t any good at investigating and even where they do occasionally find out problems and the probable causes they have limited power to punish.
I agree with you Brian.
100% with Henry.
Perils of the omniregulator – the FCA can do everything – badly!
A smaller more focused regulator could lobby for a change in the law when these things come up. The FCA ill be moving on to their next highly spun project.
It’s not just that Andrew Bailey has no idea – the whole structure is misconceived.
Read Andrew Tyrie’s “Levithian at Large” !
Everyone knows that they are professional criminals but unfortunately they have stolen £237,000,000 alone from LC&F investors which will nicely pay for some crooked lawyers to make it very hard to put them away. The Government needs to step in NOW!
The justice system is always too quick to put crimes down as “a business deal gone wrong”. It’s a way to dodge the responsibility for bringing those responsible to book.
If money was borrowed from the public for a venture, the promoters of which knew had no reasonable chance of success owing to the fees they and their confederates leeched from it, then that is de facto fraud if not de jure. And if it’s not currently de jure fraud then the law needs changing to make it so. I’d have whote collar criminals in leg irons doing hard labour 12 hours a day seven days a week. Most have never really worked and hard work for years on end is therefore the only penalty they really fear.