Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/new-model-adviser/article/a379911
FSA slams Keydata's Ford in court battle
by Iain Martin on Feb 02, 2010 at 07:00
The Financial Services Authority (FSA) has warned of a liquidity gap at the heart of Keydata’s Defined Income Plans and accused the firm’s founder Stewart Ford of trying to mislead its investigators over £4 million paid to him by the business, court documents reveal.
The regulator was taken to court last July by Swiss-based Ford (pictured) in a bid to prevent it from accessing computer files with information on Keydata.
New Model Adviser® has obtained the witness statement from FSA enforcement team lawyer Rachel Irving in which she revealed Lifemark, in which the Defined Income Plans invested, could face liquidity problems between 2012 and 2013.
The problem uncovered by the FSA is that the underlying US policyholders with the life settlement contracts held by Lifemark were not dying fast enough.
Although Lifemark’s $1.3 billion of life settlement assets are ultimately thought to be sufficient to meet its obligations, the 23,000 investors with £350 million in Lifemark could face delays in payouts in 2012-13.
Ford, Keydata managing director and Lifemark director, planned to bridge the liquidity gap by taking money from new Lifemark customers and using it to pay existing investors.
In her statement Irving said: ‘This predicted liquidity gap and Lifemark’s proposal for dealing with it indicate a real risk of problems at Lifemark.’
The Lifemark bonds which underpin Keydata customers’ investments are managed by a Luxembourg-based company called Tandem Partners Sarl. ‘Lifemark is not making any comment at this time,’ said Colm Smith, director of Lifemark and Tandem.
According to Irving’s statement Ford claimed to have been employed as a ‘consultant’ by Tandem receiving £904,500 between 2007 and 2009. The FSA was shocked to learn from PricewaterhouseCoopers, Keydata’s administrator, that the 46-year-old had actually been paid £4.2 million.
‘In some instances it appears that Mr Ford has actively attempted to mislead the investigation team, at the very least,’ said Irving in her statement. ‘The investigations team’s view is that he has…failed to both act with integrity and co-operate with the FSA.’
Markets
News sponsored by:
Today's top headlines
- Ofqual criticises CII level four diploma over gaps and easy questions
- FSA: Platforms can't reward IFAs for assets after RDR
- SimplyBiz's Ken Davy to launch restricted national
- FSA warns over advisers failing to consider cost of fund switches
- Concept hopes to fill client knowledge gap with ISA handbook
More about this article:
More from us
- Keydata: SFO working with Luxembourg regulator to trace missing £103m
- Keydata: PwC says Lifemark payments will resume
- FSCS: Keydata could hit advisers with £50m levy
- FSCS can't confirm level of Keydata claims
- Ford launches new bid to regain parts of Keydata
- PwC questions recovery of Keydata's £2m Hometrak investment
- Keydata director's salary increased eight fold in three years
- Keydata founder fails to block FSA probe
7 comments so far. Why not have your say?
Anon
Feb 02, 2010 at 09:12
The short term liquidity crisis is getting worse as Lifemark have applied to change the bond status to a zero coupon basis, therefore no income payments will be made if approved. This is confirmed on the FSA website
report thisHarry Katz
Feb 02, 2010 at 09:19
How is it that someone with ‘significant function’ can be based offshore? What sort of regulation is this? How was this permitted?
What next? CEOs based in the Caymans? Are we likely to get any answers? I don’t think so. The Regulator now whinges that it was lied to. Oh really? What did you expect? Why did you think Mr. Ford was based in Switzerland? For the Skiing?
report thisJohn Whipple
Feb 02, 2010 at 09:41
Ford
"planned to bridge the liquidity gap by taking money from new Lifemark customers and using it to pay existing investors".
Say no more.
report thisKevin Hill
Feb 02, 2010 at 13:37
Ford
"planned to bridge the liquidity gap by taking money from new Lifemark customers and using it to pay existing investors".
Isn't this the definition of a PONZI scheme?
report thisChristopher Hurst
Feb 02, 2010 at 20:07
I am incredibly disappointed that there has been so little information from those paid handsomely to protect us from financial disasters.
I wonder if such sums of money are being used to sponsor the alibi's of those who were sleeping comfortably whilst people like me are stressed that my ongoing financial survival is being doomed by vultures and swindlers aided and abetted by a set of toothless wasters loosely called Regulators/Authorities. It is about time that they [the Regulators] grew some collective backbone and did the job that I/we pay them for.
I don't give a stuff if some unreachable, unspeakable individual is lying or obstructing. This is frankly not my problem, and says more about the wet tissue paper masquerading as prevention and enforcement of prudence. Ignorance, as they tell us, is no defense. Time to step up people!
report thisJohn Whipple
Feb 02, 2010 at 21:52
The truth that there is no great Government Quango.
The FSA is reactive and is NOT a consumer protection body never has been.
The FOS is reactive and adjudicates disputes that have not been agreed previously between the agrieved customer and the firm.
The FSCS is a reactive body that will payout some compensation to those customers who have lost out if all else has failed and the firm concerned has been declared a lost cause.
So as with the Equitable Life customers you will have to band together and rattle as many cages as you can.
report thisStewart Lloyd
Jun 15, 2010 at 12:47
The whole fiasco just beggars belief. I am almost speechless. The FSA shuffle around like cripples waiting for the next crisis to arrive so that they can gripe and whinge about the unscrupulous villains within our ranks who don't tell the truth. I suggest that the FSA look to the unscrupulous members in their midst and sort out their own problems before attempting anything else. I get weary listening to the same old same old. In private industry these people would have been 'booted out' years ago as totally incompetent and rightly so.
report thisleave a comment
Please sign in here or register here to comment. It is free to register and only takes a minute or two.