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Lawyer says FSA failed to act on split-cap alert

The FSA may be guilty of gross negligence for not heeding warnings passed to it from the Guernsey financial regulator over split-cap investment trusts, according to Class Law Solicitors partner Stephen Alexander.

Testifying before the Treasury select committee this week, Alexander said there may be evidence that the regulator was in possession of information pointing to the risks of split caps but failed to act.

He said his firm, which is representing more than 1,000 out-of-pocket split-cap investors, will write to the FSA asking it to explain its lack of action.

The FSA has hit back at Alexander&#39s allegations, saying it is easy for “ambulance-chasing lawyers” to come before the select committee and make allegations but saying that the claims were unfounded.

Alexander said his firm plans to launch legal action very soon, naming fund management firms Aberdeen, BFS and Exeter and brokers Brewin Dolphin as possible defendants.

He said: “This brings into question whether the FSA can properly continue with its investigation. You cannot be the judge in your own courtroom. The FSA may be party to a possible suit.”

FSA managing director John Tiner said: “It is all very well for ambulance-chasing lawyers to come to these occasions and make these sorts of allegations. The so-called warnings were not regarded as warnings by the Guernsey regulator and they were not regarded as warnings by us.”

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