The FSA is pursuing three separate enforcement cases against Arch Financial, the fund manager behind the collapsed Arch cru range, Arch chief executive Robin Farrell and Arch head of fund platforms Robert Addison.
All three parties have referred their case to the Upper Tribunal, though no hearing date has been set at this stage.
No details have been made public about the nature of the cases against Arch. The FSA declined to comment.
Farrell says: “We fundamentally disagree with the FSA’s approach in this matter and this is why the cases have been referred to the Upper Tribunal.”
Arch is already facing three legal actions claiming a total of £330m brought by the board of Guernsey-listed cell companies that make up the Arch cru funds. The board has brought claims for damages over the way fund range was managed by Arch, claims that Arch breached its investment mandate, and failed to account for “substantial secret profits”.
An initial £150m claim was brought by the Guernsey cells in January, followed by a second £20m claim against Farrell in April, and then a third £160m claim in July against former Arch directors Addison, Neal Meader and Peter Radford, and former administrators Bordeaux Services.
The claims are being contested by Arch.
The Arch cru range was suspended in March 2009. The FSA agreed a £54m payment scheme in June 2011 between Capita, BNY Mellon Trust & Depositary and HSBC to compensate Arch cru investors. The deadline for Arch cru investors to accept a settlement offer under the payment scheme was pushed back last month until 31 December, 2013.
The regulator is consulting on a separate £110m consumer redress scheme for investors that were missold Arch cru by their adviser, which has been met with fierce industry opposition. The FSA is expected to put out a policy statement shortly if the Arch cru redress scheme is approved.
Equilibrium Asset Management investment manager Mike Deverell says: “There have been suggestions that Arch did not not manage the funds according to what it said it would do. If that is what happened, then clearly it has a case to answer. But where it is quite clear cut is that the marketing of the funds as a cautious managed was not right.”