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Troubled life settlement fund takes fight to FSA over frozen assets

by Daniel Grote on Feb 26, 2013 at 12:30

Troubled life settlement fund takes fight to FSA over frozen assets

Troubled life settlement fund ARM Asset Backed Securities has moved a step closer to challenging the Financial Services Authority (FSA) over a freeze on assets that were due to be invested in the fund.

ARM said in an update to the market that after a 10-month wait it had now received legal opinion from a Luxembourg lawyer on the freezing order. That followed its enlisting of an English QC, whose opinion gave rise to questions about the law in Luxembourg, where the fund is domiciled.

'We are now confident that the elusive conclusion to this saga of a final legal opinion is in sight,' said ARM in a statement. It said it was now expecting the English QC to complete his opinion. Barring a clash between the two opinions, it said it would use both opinions 'to press the FSA to release the freezing order over the funds'.

The freezing order relates to money intended to be invested in tranches nine to 11 of the ARM fund. However the bonds in those tranches were not issued as ARM failed to gain authorisation from the Luxembourg regulator.

The FSA has said it imposed the order until a decision over the legal ownership of the money was reached. It said in a note on its website for ARM investors: 'ARM announced that it now has a Luxembourg legal opinion supporting its view that the money is ARM's. We have not been given sight of this legal opinion, and so we cannot take a view on whether it would change our stance on the pending investor money.'

Around 2,000 UK investors placed money in the ARM fund, including approximately 800 clients of troubled former IFA Rockingham Retirement.

ARM has been caught in regulatory limbo since November 2009, when it was blocked from issuing new bonds.

2 comments so far. Why not have your say?

Bob Donaldson

Feb 26, 2013 at 13:59

Not much fun for the poor individuals that are stuck in this fund, many of whom have retired and are suffering as a result of the malaise.

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Short of Understanding

Feb 26, 2013 at 14:29

Isn't one of the key parts to the announcement..."If the FSA do not produce legal opinions to the contrary and insist that ARM expend further funds on a legal route (which has been costing £2.5 million, noting the FSA have been provided with this costing) the board will have to consider its options further at that point"...?

Regulator causes consumer detriment through endless expenses shock horror.

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