The Financial Conduct Authority has fined a former director of collapsed £237m mini-bond provider London Capital & Finance (LCF) and banned him from working in financial services.
Floris Jakobus Huisamen, who was responsible for compliance at LCF, has been fined £31,800.
The regulator said he recklessly signed off hundreds of financial promotions which contributed to thousands of investors being misled.
LCF marketed minibonds to retail investors but financial promotions, signed off by Mr Huisamen, presented a misleading picture of the minibonds, making them appear a far more attractive investment than they were, the FCA said.
It said investors were not given the full picture about the risks of the product, including the presence of hidden charges and the unsustainable nature of the lending being carried out by LCF.
It said Mr Huisamen signed off the financial promotions despite his own concerns about LCF’s strategy. He failed to provide proper scrutiny or sufficiently challenge senior management.
In particular, the regulator said, he failed to obtain evidence of the claims being made, allowed promotions that gave a misleading impression that the minibonds were regulated by the FCA.
He also continued to approve promotions even when he became aware of inaccurate claims.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Mr Huisamen should have ensured LCF’s financial promotions were ‘fair, clear, and not misleading’. However, under him, the approval process became an ineffective tick-box exercise.”
She said that as a result, thousands of investors were persuaded to invest on the basis of highly misleading statements.
Ms Chambers added: “His failings contributed to thousands of retail investors losing significant amounts of money. It is right that he can no longer work in financial services.”
Mr Huisamen agreed to settle the case and so qualified for a 30% discount. Without the discount, the penalty would have been £45,500.
The mini-bond provider collapsed in 2019 leaving 11,000 investors with combined losses of over £237m. The company had advertised the mini-bonds as ISA compatible when this was not the case.
In October 2023, the FCA censured LCF over their financial promotions. It said it did not consider a financial penalty appropriate as the firm was insolvent and in administration. A fine would, it said, “only divert funds that the administrators may use for the benefit of bondholder creditors.”
The Serious Fraud Office is currently investigating whether those responsible for running LCF may have been involved in knowingly defrauding bondholders and been the cause of much of the losses.
The sentence, suspended for two years, was imposed at Southwark Crown Court because Mr Thomson was found to have breached a restraint order on use of his bank accounts.
In 2020, the FCA banned the mass-marketing of speculative illiquid securities – including speculative minibonds – to retail investors.
