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FCA hits out at Keydata boss’s ‘fanciful’ legal fight

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The FCA has described Keydata founder Stewart Ford’s £600m legal claim against the regulator for its role in the collapse of his investment company as “fanciful”.

Yesterday Ford, along with former Keydata sales director Mark Owen and three Keydata related companies: – LAS Global Limited, LAS International Limited and Tandem Marketing Partners Sarl – began legal action against the FCA for misfeasance in public office and conspiracy to injure.

The claims against the FCA are for £122m plus interest per claimant, totalling in excess of £633m between them.

Ford believes the decision by the FSA and HM Revenue & Customs to shut down Keydata in 2009 fell outside the regulator’s statutory objectives.

He is arguing it was taken without giving Keydata a full chance to respond and was made on the basis of an inaccurate solvency report produced by consultancy PwC.

The FCA is applying to strike out the claims and get a summary judgment against Ford or, if that fails, seeking security for costs from Ford.

Ford is asking the High Court to put the claims on hold until an appeal of his record £75m fine from the regulator is settled in the Upper Tribunal.

The FCA says it has written to Ford to submit evidence to support his claims against the regulator three times, but that he only filed a summary of his case this week.

‘Fanciful’ claims

The FCA argued for Ford’s claim to be successful, the documents produced at trial which show correspondence between the FSA and HMRC and how they made the decision to wind down Keydata would have had to have been an “elaborate charade” to cover up a conspiracy against the firm.

FCA’s counsel Laurence Rabinowitz QC said: “In the circumstances where the only evidence is that produced by the FCA, the evidence is clearly one way and entirely unanswered.

“There is nothing there that the claim is anything other than fanciful.”

Rabinowitz said the FCA also objected to putting the case on hold, known as a stay in proceedings.

He said: “We strongly oppose an application to stay. One of the reasons the application to stay should not succeed is the claim is in any event hopeless. There is no reason it should hang over the FCA a moment longer.”

Ford’s fightback

Ford is representing himself in proceedings. The FCA has instructed Dentons as legal counsel.

Ford argued the case should be stayed because further disclosure to come from the Upper Tribunal proceedings would assist his case.

Ford said: “It’s no exaggeration that the FSA, through the medium of its investigation team, have destroyed my life. They’ve done so dishonestly and illegally.

“Until my dying breath I will not stop pursuing these people because it’s a disgrace what they did.”

At the time Keydata was shut down it employed around 140 staff and had around £2.8bn in assets under management. It marketed bonds backed by life settlement products through advisers.

The company’s administration in June 2009 prompted a £326m Financial Services Compensation Scheme interim industry levy in 2011, while hundreds of millions in assets were also misappropriated through one of the bonds’ Luxembourg-based issuers SLS Capital.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. The FCA may have destroyed Mr Ford’s life (his view) but he destroyed the livelihoods of thousands of customers who trusted the advice his company gave them. That is disgraceful and shame Mr Ford will not recognise this.

  2. Neil F Liversidge 20th October 2016 at 11:39 am

    Well, I hope it’s fanciful, because if it isn’t we’ll be paying the compensation and costs via our levies.

  3. Sarah

    Oh, and the regulator comes out of this as clean as a whistle? Wasn’t this a catastrophic case of regulatory failure, if not negligence.

    I won’t go into every sordid detail yet again, but the regulator knew that KPMG had resigned, they know of other irregularities, but said nothing and alerted no one. The inspections were cursory (if at all). There is a whole litany, much of which has been either whitewashed or buried.

    While Mr Ford’s case may not be rock solid, he does have some valid points.

    • I’m not saying that, but he needs to accept he is not ‘clean as a whistle’ either. I’m not defending the regulator, but neither am I going to defend this man. Our profession should be standing against people like that, not standing with him just because it allows us to take cheap shots at the regulator.

  4. Neil F Liversidge 20th October 2016 at 12:15 pm

    Harry’s right (for once!) It’s yet another example of regulatory failure that we pay for. Just like BlueInfinitas and its successor Assured Review. Now there’s a can of worms. (Only kidding Harry!)

  5. Can I ask 1 question (to the very people who know this case better than I)

    If the regulator had left well alone, would this mess ever of happened ?

  6. Having read the paperwork he sent me in 2014 I can see why he feels so strongly about this. It isn’t as “Fanciful” as the regulator might want it to be, let him have his day in court.

    • I agree Evan & Harry, until those on the FSAs side are called to bear witness we will never know the truth. Why hasn’t Dr Debbie Harrison been forced to issue a witness statement? She told everyone she had full access to Keydata to undertake her positive report on Keydata Life Settlement Plans and FSA staff who have since moved on were involved in the Arrow visits. What about KPMG who were quoted in the original leaflets as designing the model or the custodians bankers who allowed £103 million pounds to be nicked from under their eyes. All the things which went wrong were could only be checked by those with teh right to do so, I.e. The then FSA, no network let alone IFA could have the access to identify that.
      Who received the stolen goods which were the £103 million of SLS bonds, they either bought stolen goods OR the custodian bank failed in their custody responsibility and we don’t even know who the alledged custodian was!

  7. It is not a matter of defending Mr Ford. His greatest failing was probably getting involved with David Elias. As Evan has said we need to hear his side of the story and have the whole matter exposed in open court – not the star chamber of the regulator.

    And by the way, it was not so much the poor clients, but the poor asdvisers who were largely duped and misled and who picked up the tab for the poor clients. I am unaware of any livlihoods being destroyed. The pension transfer episode managed to do that more effectively.

  8. Typical FCA response. As Evan says: Let him have his day in court (and see what the judge has to say). If Mr Ford’s cause is just, I wish him every success.

  9. I feel that some commentators need to think a little more about this. Stewart Ford (SF), being the main man at Keydata, is the obvious target for investors’/advisers’ vitriol of course, but consider the following:

    • Keydata was a very successful business. Do you honestly believe that SF would have been prepared to jeopardise that by getting into bed with David Elias (DE) if he had known that he was a crook?
    • Neither SF, nor any of the other KIS Directors benefitted from the fraud perpetrated by DE.
    • Keydata’s ongoing profits would likely have been sufficient to cover the tax liability arising from the non-qualifying ISA securities issue within 2/3 years and SF himself could have doubtless lent the business money if need be. To my mind, these factors bring into question the bona fides of the FCA’s court proceedings to put the company into administration and leads one to question why they instigated and forced through said action over such a short time-frame.

  10. There is soooo much more to this and DH, with the pound where it is with the dollar now the value of the policies alone would create significant profits. This has to be heard and the truth come out. When you put this together with ‘toxic cole’ and hectors rather speedy exit there is far more to this whole life settlement debacle and hopefully with Mr Fords tenacity the truth will one day come out!

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