Four people have been arrested as part of a Serious Fraud Office (SFO) investigation into collapsed mini-bond issuer London Capital & Finance (LCF).
The four individuals were arrested on 4 March in the Kent and Sussex areas, the SFO revealed today (18 March), and have since been released pending further investigation.
In January, Finbarr O'Connell, Adam Stephens, Colin Hardman and Henry Shinners of Smith & Williamson were appointed joint administrators of LCF after it was determined to be insolvent.
The month before, the Financial Conduct Authority (FCA) had directed LCF immediately to withdraw its promotional material on the basis the way in which it was marketing its bonds was "misleading, not fair and unclear".
Among the regulator's principal concerns was "the fact that LCF bonds were being marketed as ISA eligible when they were not".
An update on the FCA website explained issuing mini-bonds was not a regulated activity, meaning firms issuing mini-bonds did not need to be authorised be the financial watchdog.
When an authorised firm approves a promotion for mini-bonds, however, it must ensure it is in line with FCA rules that the financial promotion is fair, clear and not misleading. This means, for example, that risks are "appropriately communicated".
The company's mini-bonds were used for the purposes of making loans to corporate borrowers to provide those borrowers with capital for further investment.
Smith & Williamson said there were around 14,000 bondholders with LCF and that it was working to contact the investors to make them aware of the situation and had set up a dedicated call centre and email system.
The SFO has encouraged members of the public who have invested in the LCF scheme between 2016 and 2018 to contact it through this secure reporting form.