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Aberdeen hits back over &#39misleading&#39 marketing material

MPs have accused the split-capital sector of failing to warn

investors about levels of gearing.

In its report into the split-cap crisis, the Treasury select

committee condemns the sector for failing to draw attention to the

widespread rise in bank borrowing which made zero shares far riskier

than investors were led to believe in marketing material.

It singles out Aberdeen Asset Management&#39s promotional material for

particular attention, describing it as “recklessly misleading”, which

the fund firm strenuously denies.

The report says it has been left in little doubt there was a “magic

circle” of providers propping up each other&#39s share prices through

cross-holdings. It wants fund managers, trust boards, auditors and

other split advisers to be questioned about improper practices.

Trust designers also come in for fierce criticism, with the committee

accusing many of failing to understand how their products would react

to falling markets.

It says: “We strongly believe the splits&#39 sector should have shouted

louder about the changing nature of the sector. Virtually all of the

holders of zero shares were in the dark about the levels of

borrowing.”

Aberdeen Asset Management chief executive Martin Gilbert says: “We

utterly reject the allegation about marketing materials. At all

times, we met our legal and regulatory obligations in full, both in

marketing and in all other aspects of the business.”

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