The UK’s Serious Fraud Office (SFO) has opened an investigation into four individuals associated with London Capital & Finance (LCF).
A statement issued by the SFO on Monday indicates that the four people were arrested in Sussex and Kent – two counties to the south of London.
According to the SFO, all of the individuals arrested have now been released from police custody pending further investigation.
Established in 2012, LCF became extremely popular amongst retail investors when it started offering individual savings accounts (ISAs).
In the UK, ISAs are investment accounts which are exempt from both income tax and capital gains tax.
Currently, British investors can put up to £20,000 ($26,500) of tax-free cash into these accounts.
Get rich quick returns
In general, ISAs yield pretty measly returns.
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For instance, in 2017 the average rate of return on a cash ISA was 0.96 percent according to The Express. During the same period, inflation was 3 percent, meaning many cash ISA investors actually lost money over the course of 2017.
Perhaps playing on this market downturn, LCF started offering fixed return bonds of 8 percent per annum.
Targeting elderly people in particular, the firm is thought to have raised £236 million from approximately 14,000 investors.
In January of this year, the company went into administration, leaving most of its customers – many of whom had put their life savings into the company’s ISAs – stranded.
The SFO was unable to add further comment on Monday afternoon, saying the investigation into LCF is ongoing.
As the bonds which the company sold were not regulated, they do not offer any consumer protection to investors.
That means there is a good chance the people that put their money into the company’s funds won’t see it again.