A UK high court has ruled that London Capital & Finance (LCF), an investment firm whose collapse in 2019 caused one of Britain's largest retail investment scandals, operated as a Ponzi scheme.

The ruling identified former CEO Michael Thomson and four others as knowingly involved in the fraudulent scheme, misleading investors and misappropriating assets.

LCF, which marketed high-interest 'mini-bonds' from 2013 to 2018, led about 11,600 investors to lose more than £237 million.

The company's collapse has left taxpayers to cover a £120 million compensation bill and subjected the Financial Conduct Authority (FCA) to intense scrutiny and criticism.

Administrators are pursuing over £177.5 million in damages, and the ruling facilitates the recovery of significant amounts from the defendants.

The defendants, whose lavish lifestyles were funded by embezzled investments, denied obligations of fraudulent trading.

Notably, Thomson received a suspended sentence in May 2023 for violating a restraining order related to a separate Serious Fraud Office probe.

The exact compensation amount will be determined later.