A High Court judge has ruled for the first time that London Capital & Finance, the collapsed mini-bond investment firm that raised £237 million from 11,600 members of the public, was a fraud and a Ponzi scheme.
OK.
And thanks to a commission rate Careless himself declared “huge” and his accountant “insane”, Surge was getting 25 per cent of all the money the public invested.
A 25% commission rate on a financial product cannot, not really, be anything other than a Ponzi.
Not that this is what the efficient markets hypothesis means but financial markets aren’t inefficient enough for there to be that sort of legitimate profit margin in just raising money.
If someone is offering an 11% return on a debt investment, when interest rates are near zero, that should suggest something dodgy.
If someone is offering an 11% return on a debt investment, when interest rates are near zero, that should suggest something dodgy.
Its still a truisim and one which featured a lot in my youth and early adulthood but doesn’t seem to be around much nowadays: If it sounds too good to be true, it probably is.