Administrator PricewaterhouseCoopers says in the last few days it had become aware that income from the £103m of Keydata assets invested with SLS Capital S.A. had not been paid by SLS since October 2008. The gap had been filled by KIS’s own corporate funds.
PwC says it has also identified that early redemptions of these products have been dealt with in an irregular fashion.
It says it has been unable to satisfy itself “as to the safe custody of the underlying assets in SLS and, indeed, information received over the weekend suggests that the assets have been liquidated and may have been misappropriated.”
PwC says 5,500 investors in the following products are affected: Keydata secure income bond– growth (issue 1), Keydata secure income bond – income (issue 1), Keydata secure income bond 2 – growth, Keydata secure income bond 2 – income, Keydata secure income bond 2- quarterly income (USD), Keydata secure income bond 3-growth, Keydata secure income bond 3- income.
PwC says it is now working with the authorities in an effort to trace the funds. FSA is in discussions with the SFO about the potentially missing underlying assets totalling over £100m in some of Keydata’s life settlement plans.
With regards to the £349m invested with Lifemark SA, PwC says it has received confirmation of the existence of the underlying assets. However, it has identified that early redemptions of these products have been dealt with in an irregular fashion. For the time being no early redemptions will be possible on these products. Around 23,000 investors are affected.
PwC says it is still seeking confirmation as regards the status of the the underlying assets of products invested with Hometrak S.A. Is says it has identified that early redemptions of these products have been dealt with in an irregular fashion. It says no income payments have been made by Hometrak since February 2008. Again the short-fall of this non-payment was made out of KIS’s corporate funds. Around 240 investors are affected.
PwC says the £2.2bn invested through third party contracts, where KIS acted as the Isa plan manager, is safe and that income payments are now fully operational.
The regulator it is working closely with the administrators to reach a solution for investors as fast as possible.
It says if it emerges that Keydata has caused customers to suffer a financial loss and cannot meet its liabilities, the Financial Services Compensation Scheme may be able to help.
It says: “The concerns only came to light during PwC’s detailed forensic examination of Keydata’s business and it remains a complex situation.”
The FSA says it has been investigating Keydata since discovering that the firm had been targeting investors with potentially misleading advertising materials and discovered a number of tax irregularities with some of Keydata’s Isa products.
It says: “These were referred to HM Revenue & Customs. The FSA is also working closely with other regulators including the Serious Fraud Office and overseas authorities to help resolve this situation.”