The preliminary evidence seems to show that not only are VCT managers regulatorily incompetent, but the VCTs are really being run as Ponzi or Pyramid Schemes
And do remember all this came from following the trail from simple non-filing of accounts, Articles of Association and Share allotments at Companies House by Quantexa Ltd only 16 months ago....
Are VCTs really the worst regulatory compliance offenders, or did I just get lucky with the initial immersion in the fetid swamp?
Any suggestions for the next "sectoral" investigation?
Sticking with VCTs at the moment let's take the example of the Albion stable (in the High Court tomorrow see other blog) as possibly being the worst of the genre:
Extract from my spreadsheet:
The investments are in a mere 76 entities spread across 6 VCTs to avoid equity accounting for near 50% equity shareholdings in such as Radnor School, and other such "creative accounting" techniques to pretend the VCTs are actually different from each other when they are demonstrably not.
The less said the better about Albion's 5 Chartered Accountants inability to add-up columns of figures shown on their website! In my 5 years at Price Waterhouse it was called "footing" and was double checked by a "Comptomoeter Operator" - perhaps Albion could buy one of the many relics listed on eBay.
As for Quantexa (nearly 25% of all Albion's assets) -- we all eagerly await the audited accounts that have to be filed in the next 3 weeks that will supposedly show its newly minted "mythical creature" status and finally the whereabouts of the illustrious Sarah Diamond. Then we can all run the Valuation Rules against Albion's "unusual" 25% uplift a mere 4 months ago to coincide with the new "top-up" puff and hype.
It seems pretty much unarguable that the whole VCT business rests on providing monies to buy back shares from new share issues (classic Ponzi) to not only prevent any discount to net-assets but also so that the monies can be recycled into another in-house VCT and the merry-go-round gets ever faster.
Add in paying taxfree dividends from share disposals rather than buying back shares just makes the velocity of necessary new fund raisings ever faster.
Now that we have SEED and EIS what is the justification for VCTs other than as an abused mega Tax Avoidance scheme/scam? The hype of credibility given by a Stock Exchange Listing is just all hot air when the FCA simply ignores decades of deliberate breaches of the Listing Rules. The Managers all declare that they have unspecified arrangements with the City of London Brokers to protect against a discount to Net Asset Value ever developing.
Only 3% of shareholders bother to vote at AGMs which rather proves the point of investors shutting their eyes for the sake of tax dodging.
Do play around with the Albion numbers as a starting point and then look at all the funds listed in, for example the "Wealthclub.co.uk" printed Newsletter delivered to me today by Royal Mail, remembering at all times that the real reason for investing is "free money" at the Tax Payers' expense as demonstrated by the fictional "Tony".
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