News Briefing - Crowdfunding, SME And Alternative Finance

screens on a television mixing desk

1.UK – AltFi / Regulation

The Telegraph rips into the FCA.

“The Treasury committee, an influential group of MPs led by the Conservatives’ Nicky Morgan, has also voiced concerns about the FCA. The regulator was created in response to the failings of its predecessor, the Financial Services Authority, in the run-up to the financial crisis.

The collapse of London Capital & Finance (LCF), which sold risky “mini-bond” investments, has forced the FCA to commission an independent investigation into its own behaviour. But this is just the latest in a long line of issues facing the regulator. In the past 12 months this newspaper has reported on problems with firms such as Collateral UK, Horseshoe Credit Union and Premier FX.”

2. UK – AltFi

 

More LCF news.

 

The Financial Times  tracks down an energy company link to LCF.

 

"Another company linked to two men at the heart of the £236m London Capital & Finance scandal has fallen into administration, as 11,600 bondholders wait to see if they will ever get their money back. London Power Corporation, controlled by Simon Hume-Kendall and Elten Barker, filed for administration this month, according to court filings. The pair were named by administrators to LCF, which sold unregulated mini-bonds, as two of four men at the heart of a series of “highly suspicious transactions” involving holiday resorts in Cape Verde, Cornwall and the Dominican Republic, and which ploughed millions of pounds of customers’ money into a web of intertwined schemes. Another business controlled by Mr Hume-Kendall and Mr Barker, London Power & Technology, received a £16.6m loan from a connected company, London Oil & Gas, to buy shares in London Power Corporation, according to the LCF administrators’ report. London Oil & Gas, where Mr Hume-Kendall was also chairman, was LCF’s biggest borrower, with £124m of loans. Also now in administration, London Oil & Gas funded listed energy companies Independent Oil & Gas and Atlantic Petroleum in addition to its loan to London Power."


 

The Mail / This Is Money look at the activities of Surge Financial, which did much of LCF’s marketing.


3. UK – P2P

 

P2P Finance News reports on a recurring issue in P2P – opaque reporting of loan-book positions.

“THE LATEST release of Peer-to-Peer Finance Association (P2PFA) data has shone a light on the diversity of P2P lenders’ business models.

Peer2Peer Finance News was informed last month that ThinCats’ overall loanbook is understated by the P2PFA due to the way its loans are allocated to retail and institutional investors.

Most of the P2PFA’s members, including Funding Circle, Landbay and Zopa, let retail and institutional lenders fund loans through their P2P platform.

But ThinCats enables institutional investors to fund some loans separately from its P2P platform.

A spokesperson for the West Midlands-based business lender said the platform operates three strands of lending: retail; a mix of retail and institutional; and purely institutional.

Only the first two strands go through its P2P platform, with the rest of the funds understood to be channelled to businesses via ThinCats’ parent company ESF Capital.

The spokesperson added that this sometimes means institutional investors access different loans than their retail counterparts, but insisted there is no priority given.


4. US – FinTech

CryptoCurrencyGuide reports:

“[The] Securities and Exchange Commission [has] published much anticipated guidance regarding blockchain and initial coin offerings. Bill Hinman, the Director of the Division of Corporation Finance, and Valerie Szczepanik, the Senior Advisor for Digital Assets and Innovation, developed the SEC’s guidance, a “Framework for ‘Investment Contract’ Analysis of Digital Assets,” which came from the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub).

On the same day, the SEC’s Division of Corporation Finance (CorpFin) issued a response to a no-action request, recommending no enforcement action to be taken against Turnkey Jet if it offers or sells its digital assets as it described in its request without registering the sale under the U.S. federal securities laws.

Together, the pair of documents provide an interesting, yet not monumental, development for entities working in the energy industry and seeking to utilize blockchain.

The documents did not establish a conclusive means for determining if a digital asset is a security, but they did shed light on what specific items to consider when such a determination is made. Bill Hinman and Valerie Szczepanik released a public statement, explaining that the “framework is not intended to be an exhaustive overview of the law, but rather, an analytical tool to help market participants assess whether the federal securities laws apply to the offer, sale, or resale of a particular digital asset.”

5. International – FinTech

The Santiago Times reports on the Cambridge Centre For Alternative Finance’s initiative in Chile. 

“A group of UK experts visited Santiago last month to inaugurate a fintech collaboration network with the United Nations Economic Commission for Latina America and the Caribbean (UNECLAC). This was an outcome of an intense agenda of activities carried out in Chile last October by the Cambridge Centre for Alternative Finance, (CCAF). This work is the third one launched by the centre outside the UK after China and Sub-Saharan Africa. The collaboration network will enable research and policy support for regulators throughout Latin America, in particular in Pacific Alliance countries, which already have guidelines to harmonize fintech policies. This initiative has been supported by the British government as an observer country of this group.”