City watchdog begins legal action against loan notes firm

The City watchdog, the Financial Conduct Authority (FCA), has initiated legal proceedings against loan notes firm Osborne Baldwin and its founder Reece Mennie, according to court filings. The regulator is accusing the company of selling regulated loan notes without authorization. The FCA is seeking a court order to halt Osborne Baldwin's regulated activities and to return money to investors.

The proceedings are still in the early stages, and a trial date has not yet been set. Mennie, who founded the firm in 2013, claims that he and Osborne Baldwin have been in negotiations with the regulator and have not received any notice of the impending court action. Osborne Baldwin did not respond immediately to a request for comment.

This legal action comes amid increased scrutiny of loan notes and their availability to retail investors. These high-risk investment instruments often promise substantial returns with little risk, but several schemes funded by loan notes have recently failed. The FCA had previously criticized a business that worked with promoters who mis-sold loan notes, leading to the liquidation of Equity for Growth (Securities) in March due to its inability to pay the compensation ordered by the Financial Ombudsman Service.

Several of Osborne Baldwin's schemes, including the German property scheme Dolphin, have collapsed, resulting in significant financial losses for British and Irish investors.