The suspension of the Arch cru fund range is likely to be extended to at least the end of May, Capita wrote in a letter to its investors.
However, during a press briefing, Marc Ainscough, the managing director of cru Investment Management, said: “It will take a lot longer to sort it out.” He pointed at “complicated structures” and a “difficult investment climate”.
Eight individuals that form the Arch cru investor committee yesterday elected Kevan Ward as chairman. They will now consider whether there was a regulatory breach by Arch or Capita and take legal advice, if appropriate.
Ward said the committee would review whether fund pricing and net asset valuations have been accurate, and confirm there has been no fraud.
Ward said that most important was to mak sure clients and investments in the Arch cru fund range are protected.
Ainscough added: “There are a lot of clients who are relying on a regular income [from the fund] so we have to address this as soon as possible.” He said Capita had to go through a “fairly detailed process”, negotiating with auditors, legal advisors, IFSs, HSBC and BNYM. “Wheels are moving slowly,” he added.
Ainscough said the tone of yesterday’s meeting was “very supportive” and there was “no negative talk”, although he admitted that investors were “frustrated by communication from Arch and cru”.
In a letter dated to its shareholders, dated April 3, Capita wrote: “Suspension will cease as soon as practicable after the exceptional circumstances leading to the suspension have ceased but the ACD [aunthorised corporate director] and the depositary will formally review the suspension at least every 28 days and will inform the FSA of the review and any change to the information given to shareholders.”
The letter continues that “following discussions with Arch Financial Products, and an examination of the latest asset liquidity position of those funds, we have concluded that there have been no significant improvements in the liquidity of the assets of the funds.”
Capita said that lifting the suspension of the funds would lead to an increased likelihood of requests for redemption of shares in the fund. After consultation with the funds’ depositary, it decided the suspension had to continue beyond April 9, when the 28-day suspension period would have ended.
The letter continues that Capita is currently conducting a detailed review of the assets of the fund, liquidity of its underlying assets, and considering options for optimising the position of shareholders.