June 24, 2020 / 6:43 AM / 2 months ago

UPDATE 2-UK watchdog investigates audits of London Capital & Finance

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By Huw Jones

LONDON, June 24 (Reuters) - Britain’s accounting watchdog said on Wednesday it has started three investigations into audits of London Capital & Finance, which collapsed in 2019 leaving 11,600 investors facing losses of up to 237 million pounds ($297 million).

The Financial Reporting Council said the first investigation into the investment firm will look at a one-month period that ended April 30, 2015, which was audited by Oliver Clive & Co.

The second covers the year ended 30 April, 2016, which was audited by PwC, and the third looks at the year ended 30 April, 2017, audited by EY.

It is the first time the watchdog has investigated three separate auditors for the same company.

PwC said it would cooperate fully with the FRC and had introduced a major ongoing programme to enhance audit quality in June 2019.

EY also said it would fully cooperate with the probe. Oliver Clive & Co could not be immediately reached for comment.

The FRC has powers to fine audit companies and ban auditors.

LCF went into administration in early 2019 after the Financial Conduct Authority (FCA) directed the firm to withdraw promotional material for the sale of mini-bonds that raised funds for small companies.

The FCA, whose handling of LCF is the subject of an independent review, last week announced a permanent ban on marketing mini-bonds to retail investors.

LCF and marketing activities for the bonds were regulated by the FCA, but not the mini-bonds themselves.

Britain’s Serious Fraud Office opened an investigation last year into individuals associated with LCF, broadening it out this month to cover investments made from 2013 to 2018.

Most of the bondholders are not eligible for compensation and are taking the Financial Services Compensation Scheme to court in a bid to change this.

$1 = 0.7993 pounds Reporting by Huw Jones; Editing by Jason Neely, Louise Heavens and Jan Harvey

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