FCA wash hands of banned Richard Rhys and Rebus fiasco

This gets better and better.

The FCA have stated that Richard Rhys was not in breach of his FSA (FCA) banning order when he was part of the team raising £800k on FCA regulated Crowdcube -  because Rebus was not FCA regulated.

Ok so that bit is simple. But the banning order states -

   The FSA gave Mr Rhys a Further Decision Notice on 6 July 2012 which notified    him that, pursuant to section 56 of the Act, the FSA had decided to impose an    order prohibiting Mr Rhys from performing anyfunction in relation to any      regulated activity carried on by any authorised person, exempt person, or exempt  professional firm on the grounds that he is not a fit and proper person in that he  lacks competence and capability

  So what do you call raising money on an FCA regulated platform (Crowdcube) if it is not -
'    
'    'performing a function in relation to a regulated activity'? 

  The FCA have become a national farce - Im sure if Gilbert or Coward were still with us they would be         scribbling away creating a new FCA play or musical.

  And you do have to ask why Crowdcube are promoting a pitch that employs someone who is not ''a fit
 and proper person in that he lacks competence and capability.''

  Surely we can do better. 

Crowdcube pitch has £3.5m fixed assets

At a time when Crowdcube are defending their credibility against some very serious accusations, does it come as any surprise to find pitches on the platform with odd accounts?

NO.

Left Shoe Co has £3.5m on its balance sheet as a fixed asset. When asked what this was, the CEO stated that it was 'mainly' made up of good will from the consolidation of 3 operating companies.

Well most of us know that goodwill is not a fixed asset - its an intangible asset and is also highly dubious in value in a balance sheet for a such a small company. It also appears to be being amortised at a very slow rate given that its goodwill.

All very odd but no doubt given the OK by the Crowdcube OTL Dept.

This industry needs a more professional approach  - clearly.

Crowdcube accusation is very serious.

So now we know, Kelvin Mackenzie has direct experience of the Crowdcube shuffle - the move that makes pitches fully funded on the platform.

Mackenzie, now an entrepreneur, was directly involved in a live pitch where he claims Crowdcube performed their magic.

We would love to hear from Crowdcube apologist David Prosser, who has defended the platform with great courage up till now.

Crowdcube deny any wrongdoing which is their default position but it seems impossible for them to be believed. Mackenzie claims he was part of the pitch on the platform that experienced this shuffle - why would he make this up?

See here for a piece in the Times we helped with http://www.thetimes.co.uk/tto/money/article4686065.ece 

Having studied Crowdcube and their methods for 4 years, we are sure that these claims are real - we know from our own experience that pitches can line 'investors' to drip money into the campaign over a steady period instead of investing once. This creates a false momentum, which is misleading and therefore against the FCA regulations.

This is not exactly what Mackenzie is claiming; his claims are even more serious. But it seems highly likely that once you have bent the wire once you will step over it again and again until a new fence is erected.

Just look at the way the platform dresses up pitches, allows grandiose claims to be made which turn out to be nonsense and misses out important information that might put investors off. Even the description of their own CEO is far from honest - why would anyone trust these chancers?

Where in all of this are the FCA?

There will be more.

The Sun article is highly critical of Crowdcube - what is the FCA response?

Here is the text from THE SUN on line today, WRITTEN BY KELVIN MCKENZIE

In with the wrong crowd

A FEW days ago a claims firm that had raised £850,00 through Crowdcube last year went into administration.

More than a hundred people had invested including one punter putting in £135,000.

I know something about the Crowdcube mob and what I know I find deeply worrying, and so should the FCA and Chancellor George Osborne. It may even be a job for Plod.

The reality is that crowdfunding is sticking two fingers up to regulation and you will suffer. When you meet the Crowdcube people they say they turn away most companies seeking investment.

That’s not because the idea/company is no good but because you and the shareholders of your little business aren’t bringing any or enough money with you. And that’s no good to Crowdcube.

This is how they work.

Supposing you had already raised £150K – through remortgaging the house or through friends – for your toy company and you want another £500K. What Crowdcube do – and it may be true of other crowdfunders – is they put the ask of £650K (which includes the owner’s undisclosed £150K) alongside a description of what the company does and why they want the money.

Then the neat trick. Crowdcube start using the undisclosed £150K to create the impression there is demand for investment.

Every few days or so a fresh “investment” in the toy company of say £10K appears on the site. But it’s not the investor’s money but is made to look like it.

So an investor thinks, “There is money going there I must jump on the bandwagon.” Then they invest their hard-earned money.

This racket should stop immediately. Plus selling A and B shares (they have no power) and inviting £10 investments. It’s not the 3.30 at Fakenham. Be grateful for a statement from Crowdcube

If any of the above is true, where are the FCA?? 

FCA on a busy afternoon.

Can this really be true - http://www.thesun.co.uk/sol/homepage/suncolumnists/6915655/Corbyn-wants-us-all-to-live-in-terraced-houses.html

In a piece in The Sun today, Kelvin Mackenzie accuses Crowdcube of mass manipulation of their ECF platform.

We have been saying this a while but only have limited evidence - the case of Waterbabies for example.

The Sun has now accused Crowdcube of drip feeding campaigns with 'investment' which is in fact money raised beforehand and provided by the company pitching. This continuous 'investment' ensures the pitch remains at the top of the pile and looks active. The Crowd will then be persuaded to have a go as everyone else is. Only problem is that 'everyone else' is a fudge - according to Kelvin.

We know that Crowdcube play games and have a reputation for pushing regulations to the extreme but this really would be catastrophic for their credibility if its was true.

Anyone with any evidence should step forward now.

Is this platform misselling?

We were sent this email by an investor member of Investden on the 5 February. Investden is one of the newish equity crowdfunding platforms that have popped up recently.

Nothing wrong with it you would think. Until you look on the Investden site and realise that the pitch which they state here is on its last 12 hours has now been extended for another 8 days.

When is misselling not misselling?

This platforms claims to have teamed up with accounting giant KPMG - the same accounting giant that had four top level accountants arrested for fraud last November and were fined $465m in 2014 for criminal violations.

Sounds like a good fit.

It really is a bloody disgrace.

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Mara Seaweed listed in M&S

Amidst all the bad news at last we have some good.

We have been hyper critical of Mara Seaweed and the way their Crowdcube campaign was run. However credit were credit is due, they have now been listed in M&S.

Of course one major listing does not a great company make, but it's heading in the right direction. It will need to keep going that way to get close to its ambitious 2016 and 2017 projections.