FCA Imposes Restrictions on LCG Amid FlowBank Bankruptcy

FCA Imposes Restrictions on LCG Amid FlowBank Bankruptcy

The UK’s Financial Conduct Authority (FCA) has imposed restrictions on London Capital Group Ltd (LCG), retail forex, and contracts for differences (CFDs) broker following developments related to its parent company, FlowBank, which recently entered bankruptcy proceedings under Swiss regulatory oversight.

LCG, owned by FlowBank and previously associated with London Capital Group Holdings, has faced turbulence since its delisting from the London Stock Exchange and NEX Exchange in 2018. Charles-Henri Sabet, former CEO of LCG, acquired the company in 2018 as part of a restructuring amid financial difficulties at London Capital Group Holdings, which subsequently went into liquidation.

FCA Imposes Restrictions on LCG Amid FlowBank Bankruptcy

The recent actions by the FCA include prohibiting LCG from onboarding new clients or introducing new clients under its introducing broker business. The company cannot accept new client funds or engage in regulated activities. Asset restrictions prevent LCG from disposing of or diminishing its assets or customer funds.

In response, LCG has engaged an independent firm to assess its current financial status and has voluntarily applied these restrictions while the assessment is ongoing. Existing clients holding balances directly with LCG have to withdraw their funds, although assurances have been provided that client funds are held separately in designated accounts.

LCG’s sister entity, licensed in the Bahamas, appears unaffected by these regulatory actions, as it does not display any notices of restrictions on its operations.

Meanwhile, FlowBank’s majority shareholder has condemned the Swiss regulator’s actions as a violation of rights and has signaled intentions to pursue legal recourse against the regulatory decisions.

These developments highlight ongoing challenges in the financial services sector, particularly within the realm of forex and CFDs trading, as regulatory authorities globally tighten oversight to safeguard investor interests amid corporate financial difficulties.

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