The law firm Shearman & Sterling has written a letter this week to the Financial Services Compensation Scheme, outlining a new legal justification for compensating London Capital & Finance en masse. Shearman & Sterling are reportedly acting pro bono for some LCF investors.

At the heart of their argument is a recent clarification by the FSCS that investors with a claim relating to FCA-regulated activities carried out by LCF are still covered by the FSCS even if LCF was not authorised to carry out that activity.

The specific activity in question was regulated advice.

Over the last month or so, LCF investors have been encouraged to pore over emails and rack their brains in case they can argue that they received investment advice from LCF call centre workers to invest in LCF minibonds. This would constitute misselling, which would open the doors to the FSCS.

Unfortunately, this is a low-percentage strategy which will not help the vast majority of LCF investors. The fact that some call centre workers may have gone off-message in order to close a deal does not change the fact that LCF was not a financial advice firm, did not advertise financial advice, was not authorised to give advice, and employed no advisers with recognised financial advice qualifications.

However, the fact that the FSCS will potentially pay out for claims in relation to regulated activities, regardless of whether LCF was authorised to carry out those activities, has inevitably raised the question: what if LCF was carrying out other regulated activities which would cover all LCF investors?

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Several weeks after his £350-an-hour non-executive position in Crucial Academy was exposed, which was formerly part of the Surge group of companies which promoted London Capital & Finance, high-flying Johnny Mercer MP has finally broken his silence.

Today the BBC has explicitly connected Mercer's salary to LCF. Previously, while it was a matter of public record that Crucial Academy was part of the Surge group of companies, no one had been brave enough to trace a direct financial link between Mercer and LCF.

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Crucial Academy Limited, previously owned by Paul Careless, the director of London Capital & Finance's marketing agent Surge Financial, is to be sold to its chief executive, former Royal Marine Neil Williams.

The deal is expected to conclude this weekend. The consideration was not disclosed.

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Articles dug up from the archives of local papers have revealed that before London Capital and Finance invested £21 million in the Waterside Villages resort in Cornwall, the same resort was the subject of a planned £30 million investment which was to form part of a £250 million investment in UK tourism by China.

Chinese company Sinofortone and London Group plc, which was owned by Elten Barker and Simon Hume-Kendall, signed a Memorandum of Understanding in 2015. From a Cornwall Live story from October 2017:

The plan was to purchase of the Lakeview Country Club and rename it Waterside Luxury Village as a “first step with other locations to be announced”.

The development was set to include 36 luxurious villas, a state-of-the-art visitor centre, spa, dining facilities and sports venues. There would have also been a five star 105-bedroom hotel, a wide variety of outdoor pursuits, Mandarin-speaking receptionists and tour guides.

Sinofortone was headed by Peter Zhang. From 2015 and 2016 Sinofortone announced a dizzying array of expensive investments into the UK, which included:

• an investment of £2 billion into Welsh biomass and food stations
• the aforementioned £250m investment into holiday villages
• £100m into a Paramount theme park in Kent
• £10bn into housing and transport in Scotland
• London’s Crossrail 2 rail line
• A proposed science park in Cambridge
• Regeneration scheme in Huddersfield and Stoke-on-Trent
• A reported £700m takeover bid for Liverpool football club

None of these plans came to anything. Sir Richard Heygate, who was a co-director of Sinofortone’s UK company, later said that Sinofortone’s proposed investments were “all bollocks” and “Peter [Zhang] is a nice guy but he believed he could create a private vehicle for raising money without having any capital himself, and I just thought was impossible – a crazy idea”. Sinofortone’s website disappeared some time ago.

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Independent Oil & Gas is hoping to raise £16.6 million from the AIM stockmarket in order to develop its North Sea gas wells while deferring repayment of the £38.6 million it owes to London Capital & Finance.

As part of a debt restructure, £7.1m of debt due to one of LCF's underlying borrowers, London Oil & Gas, will be rescheduled. A further £1.64m of debt will be converted into ordinary shares, and the maturity of existing warrants will also be extended by 12 months.

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