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FCA to investigate Connaught operators as talks break down

The FCA plans to investigate Capita Financial Managers and Blue Gate Capital, the operators of the failed Connaught Income Series 1 Fund, after withdrawing from talks with the firms.

The regulator had been supporting negotiations with the aim of securing an agreement between the parties to address losses to investors in the fund.

But in a statement issued today, the FCA says: “The period for the negotiations has been extended more than once as it was considered to be in the interests of investors to do so.

“Due to the level of public interest in the fund, it was decided to make this decision public, but there will be no further comment until investigations reach a conclusion.

“The fact that a firm is under investigation does not mean that the FCA has reached any conclusions on whether any wrongdoing has occurred.”

The Connaught Series 1 fund was suspended in March 2012 and a review was commissioned to ascertain its true value.

In 2012, Money Marketing revealed investors faced losses of up to 50 per cent. An independent review by Duff and Phelps suggested recoveries would be between £46.5m and £53.2m of the £105.5m used to fund Tiuta, a bridging lender.

A decision to wind down the Series 1 and £18m Series 2 fund, which was used to fund another Tiuta subsidiary called Tiuta Development Finance, was made in June 2012. A Series 3 fund, which was not linked to Tiuta loans and raised around £22m, was wound down in July 2012 due to a spike in redemptions.

Connaught Asset Management bought Tiuta International and Tiuta Development Finance, the Tiuta Plc subsidiaries that used the Series 1 and Series 2 funds respectively, for £1 in June 2012. In July 2012, Money Marketing revealed Tiuta International had been placed into administration by CAM.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. E L Wisty (an only twin) 10th March 2015 at 9:55 am

    Obviously one does not wish to prejudice an investigation, however, we’ve been here before with Capita. The difference, so far, is that the FCA (unlike the FSA in the CF Arch cru debacle) has not let Capita off the hook by agreeing an imprudent deal that fails investors and leaves advisers to pick up the tab.

    I sincerely hope that, this time, Capita’s actions will be fully scrutinised and, if appropriated, fines imposed.

    Perhaps I am being overly optimistic, but maybe Capita has finally lost its ‘get of off jail free’ card.

  2. @Wisty – I think all we want to see is as you say scrutiny and transparency. We didn’t see that with arch Cru and the advisory sector was left to pick up the tab and disproportionately for my mind. I don’t see how they can look at Crapita without looking at the advisers at the SAMETIME as should have been done with Arcg Cru and only then proportionately apportioning any blame and agreeing settlement with ALL parties otherwise one group is preferred over the other where it is simply the weakest party who keeps being forced to pick up the larger tab (i.e. not the providers and because of the consumer lobby, not the smaller investor, which in part is rightfully so, but it does appear that as with Keydata too, justice and victory goes to he with the biggest wallet OR biggest politically sway and not based on justice of the law)

  3. Capita – if you have ever had the misfortune to deal with them (and still have your hair) you will now what an absolute shower they are. I wouldn’t trust them with tuppence ha’penny, let alone the custody of huge sums of money. This Arch Cru Key Data – high time the FCA withdrew their permissions.

  4. E L Wisty (an only twin) 11th March 2015 at 10:06 am

    @ Harry

    The first question on my fund due diligence form is:

    “1. Is Capita the ACD of this fund?”

    Only funds that can answer “No” get to move onto the next stage.

    If we all voted with our client’s money then funds would soon start switching to alternative ACDs.

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