New action group plans to tackle Keydata third parties

19 April 2010 10:08 am | By Hannah Stodell

The Keydata SLS LSC Investors’ Trust Action Group, which is backed by law firm Addleshaw Goddard and a number of IFAs, plans to pursue a complete recovery of the losses suffered by its members, including costs and accrued interest.

Founder Anthony Lahert says the group’s focus will be third parties who were paid to protect investors’ assets but he has pledged not to pursue IFAs who recommended the plans.

It has been established to represent clients who have invested in Keydata Secure Income Bond issues 1-3 (Isa/direct), invested directly into bonds issued by SLS Capital SA or invested in Life Settlements Capital SA (directly/ via an IFA), Luxembourg based vehicles both set up by deceased businessman David Elias. Around £103m of underlying assets invested by Keydata with SLS are still missing.

It is prepared to take legal action against one or more of the institutional counterparties who were paid to protect investors’ assets following the completion of a detailed legal investigation.  It also plans to investigate possible claims against other parties who were advising in the matter or acting as agents on the transactions.

It is anticipated that a contribution of 1-2 per cent of savers’ cash investment will be required to assist in the funding of the legal investigation.

The group says the FSCS has agreed to provide an amended application form for group members who have eligible compensation claims in excess of the FSCS maximum of £48,000 to allow them to retain their rights against third parties. This will allow members to investigate and to pursue recoveries from third parties via the action group.

Speaking to the Mail on Sunday, action group founder Anthony Lahert who invested “substantially” in SIB said: “There’s no point investors like me relying on Keydata’s administrator PricewaterhouseCoopers for the return of out money, given that other creditors stand ahead of us in the queue and there is little chance of sufficient assets being recovered.  There’s also no point in pursuing those financial advisers who were duped into recommending the plans. 

“Instead, I want our energies used to pursue with vigour those companies that were supposed to be watching over our investments to ensure they were safeguarded and that have the resources to pay for their mistakes.”

A Keydata 2005 brochure for financial advisers for its secure income bond 1 refers to MeesPierson Investment as custodians of the SLS Capital bonds, payment agents and registrars responsible for holding SIB fund assets. 

The brochure also stated that KPMG generated the actuarial models used to produce the investment criteria for the life settlement bond.

However a letter sent by KPMG UK chairman John Griffiths-Jones to a member of the Keydata victims action group says that KPMG became aware of the matter when the same wording was used in issue 2 of the plan and objected “most strongly” to Keydata  about the use of its name and the “inaccurate and misleading description.” 

Griffiths-Jones says the firm referred the matter onto the FSA after failing to receive an adequate response from Keydata. 

HSBC also described the reference to its role played as “misleading and inaccurate” in a letter to the Keydata action group. 

In an update last week the Serious Fraud Office said it had not traced the ultimate destination of all SLS funds but that “a sizeable proportion of funds” has been traced. As well as investigating Keydata’s activities it has now widened its investigation into the activities of Luxembourg based company Lifemark which undertook the same business as SLS but was under different ownership.

Savers should visit www.ksl-it.com to join the group. Registration is not legally binding and no financial contribution is required to register.

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