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FSA drops threat over splits for firms in 194m fund deal

Investment firms have escaped FSA punishment after putting aside around 194m for investors in failed split-capital investment trusts.

Following a year-long FSA probe, 18 firms have signed up to a deal which puts aside the cash for investors and sees pro-viders not found liable for the losses of the trusts.

But four companies and eight individuals could still be in the FSA firing line after failing to sign up to the deal.
The deal sees FSA individual warnings issued to certain individuals within providers, with some agreeing to take measures including redeployment or removal from supervisory jobs, refresher training and increased supervis-ion. Others have signed undertakings not to perform particular controlled functions or work in financial services for a specific period of time.

Former Aberdeen Asset Managers Christopher Fishwick has agreed not to apply for FSA authorisation for seven years.
Split caps’ pioneer 71-year-old David “Dotty” Thomas, formerly of Brewin Dolphin Securities, had all regulatory charges dropped against him as part of the probe. He had taken the FSA to a tribunal over regulatory findings against him.

Individual cases against now retired David Keen of Morley Fund Management and Alan Kerr of Legg Mason Investments (Europe), were closed with no findings of misconduct.

Compensation will be available for people who invested in zero-dividend preference shares and in a number of specified unit trusts and other financial products that invested in zeros.

Rowan Capital Manage-ment head of research Tim Cockerill reckons that the key issue with the fund is whether it is enough to recompense investors.

He says: “It seems likely that many investors will find this scheme satisfactory but it is important that the availability of the fund is made common knowledge.
“It seems unlikely that this scheme will restore confidence in the split-cap sector. Equity investing will always carry risk and many investors will have decided that equities are not for them because of the losses they have incurred.”

The 18 firms that have signed up to the FSA deal

Aberdeen Asset Managers
ABN AMRO Equities
Brewin Dolphin Securities
Britannic Investment Managers
Collins Stewart
Edinburgh Fund Managers
F&C Asset Management (formerly Isis)
Framlington Investment Management
Gartmore
Govett Investment Management now AIB Investment Management)
HSBC Investment Residuary(formerly HSBC Investment Bank)
Jupiter Asset Management
Legg Mason Investments (Europe)
Morley Fund Management
New Star Asset Management
Premier Fund Managers
Royal London Asset Management
UBS AG (formerly UBS Warburg)

Firms listed as being involved by the FSA but not included in the FSA list of parties to the settlement:

Aberdeen Asset Managers Jersey
Aberdeen Private Wealth Management
Insinger de Beaufort (International)
Le Masurier James & Chinn

Investors helpline: 0845 606 6389
Website: www.funddistribution.org

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