Mini bonds took another hit in the national press last week. It is worth pointing out however that mini bonds are an instrument. They are no more capable of doing harm than any other inanimate object.
Mini bonds are merely a debt market tool to facilitate capital being lent by one party/parties to another party.
Mini bonds are an illiquid security. There is no ready secondary market and most are non transferable. On this basis the mighty Financial Services and Markets Act 2000 clearly states that they may not be promoted to retail investors; and frankly DevDosh Ltd says “bloody right too” to that.
For a client to be able to afford to lock their capital away for a prolonged period they need to be financially aware enough to have already reached the high net worth individual, sophisticated investor or professional investor status. Who on earth could sleep at night having sold a non readily realisable security to an individual that may need access to the capital prior to the end of the bond term.
Also the question has to be asked, who would buy it if you weren’t in a position to do so and what governing body would allow their members to market it?
When one promotes an illiquid asset such as a mini bond certain criteria has to be met.
- Investment brochure has to carry a high level of risk warning
- Potential investors have to be certified as qualified to receive information
- Detailed Information Memorandum has to be sent to the client explaining the entire investment in great detail and carry a high degree of risk warnings
- All debentures/loan notes/trust deeds etc have to be provided to the client and all have to carry a high degree of risk warning
- All reasonable information required by the client or their professional advisor’s has to be made available
- The client has to be invited to invest by way of offer letter which re-explains the entire investment, carries risk warnings and re-certifies the potential investors as qualified to participate
As long as the above process is met to the correct standards and to the correct market one could argue that all parties are culpable.
The investor has enough to read and confirm to be able to make a informed decision
The promoter has sufficient space to make the offer very clear
The governing body has sufficient due process to enforce to make sure the previous two parties tick enough boxes for everyone to be fully informed and portray the offer correctly.
Still, the system failed again last week with an FCA speculative mini bond provider fell into administration leaving 1,800 customers bereft of their £36,000,000.
DevDosh Ltd will only do business with the qualified investors that not only meet the FSMA criteria but also our own more stringent requirement to invest. So for the safest 10% fixed income return contact us today.