Future of structured provider Arc in doubt due to Lehman plans
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The future of structured product provider Arc Capital & Income is in doubt with an imminent announcement expected, Money Marketing understands.
Money Marketing understands that the FSA has concluded that one of the firm’s structured plans was wrongly marketed and consequently the firm is facing FSA liabilities for client losses of around £5.7m. The FSA is likely to make an announcement this week.
The firm has three plans exposed to Lehman Brothers: the fixed income plan 6, the stepped kick out plan 5 and the bull & bear enhanced investment plan 3.
Last week, Money Marketing reported that ACI had slimmed down its compliance team in a restructure.
Paul Fox, who was part of a team of four responsible for day- to-day compliance oversight, left the firm last week.
When questioned by Money Marketing, ACI said the restructure was part of cost cutting measures restructure and was unrelated to the FSA’s ongoing review into Lehman-backed structured products.
At the time an Arc Capital & Income spokesman said: “Everybody is looking to trim their costs. It is nothing to do with the review, it is just Gracey structuring the business.”
ACI is a separate legal entity to Arc Fund Management following a management buyout last year led by finance director John Gracey.
Earlier this month, Money Marketing revealed that NDFA was to be placed into administration after the FSA concluded that the firm was liable for losses on its Lehman-backed structured products. The firm had over £30m of investors’ money in Lehman-backed plans.
An Arc Capital & Income spokesman refused to comment.
An FSA spokesman refused to comment.
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