Jim Armitage at the Evening Standard reports that administrators are investigating the role played in the collapse of London Capital & Finance by John Russell-Murphy, who pitched LCF bonds in person to wealthier investors.
The Evening Standard has spoken to 10 clients of LCF who invested between £100,000 and £580,000 and allege Russell-Murphy gave them financial advice that experts have suggested he was not allowed to give under Financial Conduct Authority rules because he is not a regulated adviser.
One, a severely disabled woman in her late seventies, claimed he had visited her at her home, looked at the paperwork for her existing savings and recommended she put £100,000 of her entire £150,000 into LCF. The former charity worker said: “I told him I had to keep back £20,000 for my grandchild’s university bills but he said if I invested £100,000 with LCF the interest would pay for them and I wouldn’t lose the capital. Now it looks like it’s all gone.”
One investor claimed that Russell-Murphy claimed inaccurately that LCF bonds were protected by the FSCS.
Michael Grice, 84, claimed Russell-Murphy came to his house last September and reassured him that if anything went wrong with the bonds, LCF investments were backed by the Financial Services Compensation Scheme.
In a case of crimes against cliché as well as the Financial Services and Markets Act 2000, another investor said that John Russell-Murphy said that he would recommend LCF bonds to his own mother.
Another said, when he came to her house, she asked if he would recommend LCF to his own mother. “He smiled and said, ‘yes’,” she claimed.
For the record, we are not in any way suggesting that John Russell-Murphy was being dishonest. We sincerely believe that John Russell-Murphy would indeed recommend LCF bonds to his own mother.
Russell-Murphy reportedly described himself as an “LCF senior account manager” but was actually employed by LCF’s marketing agent, Surge. Investors say that Russell-Murphy recommended other investments linked to Surge as well as London Capital & Finance. A spokesman for Surge said that Russell-Murphy was not authorised to cross-sell non-LCF investments.
According to the Evening Standard, Russell-Murphy was unavailable for comment on the above claims.
Not mentioned by the Evening Standard is John Russell-Murphy’s previous role in the unregulated bond world. Russell-Murphy was one of the three founding directors of MJS Capital – he was the “J” in “MJS”, along with Martin Westney and Shaun Prince. His directorship lasted from its incorporation in March 2015 to his resignation in February 2016.
Russell-Murphy left MJS two years before it collapsed in 2018 and there is no suggestion that he had anything to do with its failure.
In the dim and distant past Russell-Murphy and London Capital and Finance CEO Michael Andrew “Andy” Thomson were at upmarket salesforce St James’s Place together. The FCA register shows they were both at SJP on 1 December 2001 when the FCA’s register began*. Thomson left in December 2001, shortly before joining NatWest as a Trainee Adviser. Russell-Murphy remained at SJP until April 2003. Since when, according to the FCA register, he has never held FCA authorisation.
Not that this stopped him advising elderly investors to invest in his old mucker’s company 12-15 years later.
[Hat tip to Mark Taber for unearthing the St James’s Place connection.]
A lawyer for Mischon de Reya, who are working with LCF administrators Smith & Williamson, stated
“We are investigating all parties connected to LCF including those involved internally and externally in the sales and marketing function. We understand John Russell-Murphy was a key figure in the sales operation run by Surge on behalf of LCF including making home visits to certain bondholders. He also appears to have significant links to the former directors and shareholders of LCF.”
*Thanks to reader Adam Smith for explaining why the FCA shows Russell-Murphy and Thomson as joining on the same date of 1.12.01.