Exclusive FNG… FNG has learned that Retail FX and CFDs broker London Capital Group Ltd (commonly referred to as LCG, on the website lcg.com) has placed severe restrictions on its FCA license and activities.
LCG is run from London by CEO Dave Worsfold and Managing Director Matt Basi. The company is owned by Swiss-based Neobroker / neobank FlowBank SA, which was founded by former LCG CEO Charles-Henri Sabet. About a year ago LCG changed its business model, effectively becoming an introductory broker to (former) competitor and leading online broker IG Group (LON:IGG), as was also exclusively reported at the time here on FNG.
And about two weeks ago, LCG’s parent company FlowBank was forced into bankruptcy and liquidation by the Swiss financial regulator FINMA (although as we reported yesterday, FlowBank shareholders are lining up to fight FINMA over the matter).
This makes LCG an asset of a bankrupt and liquidated company. Apparently at the request of the Swiss authorities, the FCA has imposed restrictions on LCG’s license and operations to ensure that any value of LCG can be repatriated to FlowBank, to help repay FlowBank’s creditors.
LCG also operates an offshore entity in the Bahamas, LCG Capital Markets Limited, which operates from the same lcg.com website. When visiting the lcg.com “offshore” site, no restrictions appear to apply to the LCG Bahamas entity at this stage.
The restrictions of LCG’s FCA licence apparently include:
Restriction on regulated activities and boarding. LCG cannot install new clients or introduce any person to a company for which it acts as an Introducing Broker. LCG also cannot accept new customer funds. The company cannot carry out any ‘regulated activity’ for which it is licensed, except in relation to existing customers.
Limitation of assets. LCG cannot dispose of or reduce the value of any of its own assets and any funds it holds for its customers, whether in the UK or elsewhere.
Based on a message released by LCG to its customers, customers are requested to contact the company to withdraw their funds. Withdrawal of LCG client funds held in specified client fund accounts is apparently not restricted by the FCA.
LCG now displays a notification message at the top of its website which reads:
Important notice: On Thursday, June 13, the parent company of London Capital Group Ltd. (LCG), FlowBank, has started bankruptcy proceedings following the intervention of the Swiss regulator, FINMA. Accordingly, LCG has engaged an independent firm to determine the UK entity’s current financial position. While this assessment is ongoing, LCG has applied to the FCA to place certain restrictions on our regulatory licences. Details of the restrictions can be found on the FCA website here.
As part of this voluntary agreement, we are not currently conducting any new regulated activity. If you are a legacy customer who continues to hold balances directly with LCG, you should contact customer services on 02074567020 or email customerservices.uk@lcg.com to arrange your withdrawal. Your money continues to be held in ring-fenced, designated client money accounts.
If you are an existing LCG Introducing Broker/Partnership business customer who holds an account with one of our partner companies, you are not affected by these developments – your account continues to operate as normal. If you have any questions please contact our relationship management team on 02074567575.
We will continue to follow this story as it unfolds.