Link: All our MJS Capital articles
It’s been nearly a year since MJS Capital (known as Colarb Capital since October; to avoid confusion, for the rest of this article we will continue using their original and less silly name) started to fail to pay investors’ interest and capital on time, something it has blamed on “banking issues”.
Investors are now being told that to receive their funds back, they must switch from MJS’ bond series 3 or 5 to Colarb bonds series 4. Investors have been promised that if they do, quarterly interest payments will resume and they will receive their (already overdue) capital back after a year.
The information memorandum for the new Colarb bonds describes a business model which is essentialy unchanged from the original MJS model; funds are to be invested in arbitrage and “delta neutral” trading.
The literature claims that “ColArb Capital Plc was incorporated… to provide accelerated returns for other investments” which is pretty brazen given that “accelerated returns” is the exact opposite of what MJS investors have experienced over the last year.
Colarb representatives are claiming that MJS investors whose funds are already due for full repayment must switch to the new Colarb bonds to receive their funds back. This raises two very important questions:
- If Colarb has sufficient funds (and open banking channels) to make interest and capital repayments to “Colarb 4” investors, why can they not make repayments to investors in the original MJS bonds?
- MJS has already had a year to resolve its issues and has apparently not done so. What exactly is supposed to have changed when repayment of the new bonds falls due in 2020?
anticipated” – MJS Capital CEO Shaun Prince in July 2018
An email sent to investors by MJS Capital CEO Shaun Prince in July 2018 waxed lyrical about the company’s performance – despite the fact that it had already been in default of interest payments for several months by this point.
The email claims that in late 2017, MJS Capital put in an “indemnity cover” that “works in a very similar way to a performance and capital guarantee.”
Prince explicitly compares MJS Capital’s insurance cover to the Financial Services Compensation Scheme and suggests MJS Capital’s insurance policy is even better, because it has a limit of £30 million rather than the FSCS’ £50,000 or £85,000.
Prince’s claim that MJS Capital has secured insurance cover equivalent to (or better than) the FSCS is, to put it mildly, complete nonsense.
No insurer insures unregulated investment schemes against all risk of loss. If they wanted to take on the risk they would invest in the company’s bonds and get the same return offered to bondholders, rather than just an insurance premium.
If an insurer did agree to cover an investment against all loss (known as a credit default swap), the premiums for this policy would bring the offered return of the investment down to the risk-free rate.
The original MJS Capital literature referred to insurance policies the company had in place against trading counterparty failure and third party fraud. If MJS Capital has taken out a further £30 million insurance policy, it is likely that this insurance is along similar lines, with the insurance applying only in very specific circumstances that would not cover MJS Capital running out of money. Needless to say the insurer is not named.
As a further carrot to encourage investors to defer asking for their money back, Prince’s email claims that this new insurance policy does not apply to investors in their current bonds, but that investors can switch to new bonds which are covered.
Prince finishes off by claiming that MJS Capital is in the process of applying for a stockmarket listing, which he expects to be easy thanks to the due diligence already conducted by the unnamed insurer. MJS Capital is also to launch new investments in cryptocurrency and medicinal cannabis.
Prince previously claimed in March 2017 that MJS Capital would be listed on the London Stock Exchange “in the coming months”. These months appear to be a long time in coming. There is no public evidence of any stockmarket listing application by MJS / Colarb Capital.
“Investors are now being told that to receive their funds back, they must switch from MJS’ bond series 3 or 5 to Colarb bonds series 4” – Is that legal?
Surely MJS must either pay the “agreed” coupons and redeem investors at the end of the term of the series they purchased?
There might be advantages to switching but surely investors should be given a choice? MJS cannot dictate it “or else we keep your money” – can they?
As for a stock market listing, this guy lives in his own fantasy world. Moreover, claims about the “insurance” cover being better than FSCS but not disclosing the insurer has all the characteristics of fraudulent misrepresentation. Why don’t the authorities intervene and stop this guy?
Sure it is. If MJS bondholders and MJS are both happy to renegotiate the term of their loans, it’s a free country.
Naturally not. If bondholders have an outstanding debt against MJS and don’t want to switch to “Colarb 4”, they are free to either go legal or write it off and forget about it. MJS can’t stop them doing either.
“Sure it is. If MJS bondholders and MJS are both happy to renegotiate the term of their loans, it’s a free country.”
As written, it doesn’t read as a “negotiation” but an edict. It doesn’t look like it’s offering any room for negotiation. It reads as “take it or lose it” and MJS don’t really care whether investors are happy or not.
Basically investors are most likely to have to write it off – the money has probably gone and there will not be much “choice” in the matter and the authorities don’t really care. And in the words of one scammer I threatened with “Action Fraud”, he replied in an email: “That’s fine, Action Fraud are nobody and have no authority”. The awful truth is he was right! Action Fraud told me they were not going to investigate my complaint.
Everyone is [free] but some people are more [free] than others ….
Is Shaun Prince a real person that investors met or is he hiding behind some other fake identity? If his victims file a joint fraud case against him and his company, wouldn’t the authorities take action, throw him in jail and get some of the money back?
Running a failed investment isn’t fraud.
Shaun prince why haven’t you posted an update about the court case to wind up the company which happened on January 23rd 2019 wouldn’t it just be nice for you to tell the truth for once in your life and let your investors know what’s going on.
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How do I know if I appear on any creditors list? Who can I contact about this as I invested a considerable amount in 2015.
We are not talking about a ‘failed investment’ here but lies, fraudulent claims and extorting money by misrepresentation. That should be in the domain of the authorities.
The Fraud Act, 2006, https://www.legislation.gov.uk/ukpga/2006/35/section/2 section 1 does describe what heather is saying, as fraud – ie lies, fraudulent claims to extort money. The issue is section 2. Basically, the person telling the lies has to be shown to “know” they are untrue or might be untrue. In my opinion, I feel that shouldn’t be terribly difficult if the person making the false representation has established themselves as an “expert” then clearly they should “know” what they are saying might be untrue. However the “defendant”, if we can call them that for now, would always argue that at the time they made the claims they believed, in all honesty, what they were telling you was true. Proving otherwise can be difficult I believe. So if you have no way of showing the defendant knew they were lying in order to extort money from you then they can simply claim it as a failed investment but they thought, at the time, the information they gave you was true.
In my case, the adviser, set established himself as an expert, claiming several years in financial service industry in big name companies like the Halifax, claimed to hold all UK qualifications but then lied to me about the receiving trustee and the investment funds he was recommending. He said in writing they were regulated collectives but in fact were unregulated collectives. I was neither sophisticated nor High Net Worth according to the legal definitions of those terms and so it was unlawful for him to recommend them. Given he claimed to be an expert he would have known this and consequently he was making “false representation”. I complained to Action Fraud. Did they care? Nope. Not one bit and said they weren’t going to investigate it. So to answer Roma, nope the authorities won’t necessarily take action – except in high profile cases it seems. Little ol’ me can go whistle for justice.