The Financial Services Authority has said Catalyst Investment Group could be ‘fined, banned or face public censure’ in relation to its sale of offshore ‘death bonds’ to UK investors.
The watchdog said Catalyst, which was the UK marketing and distribution firm for ARM Asset Backed Securities, has been referred to its Enforcement and Financial Crime Division, which could impose sanctions for any rule breaches.
The FSA would not give comment over the nature of the rule breaches, but said possible sanctions could include a fine, being banned, or public censure.
Catalyst distributed the ARM life settlement fund, which was closed to redemptions in August last year, while also having its licence taken away by the Luxembourg regulator, where the vehicle is based.
The FSA has issued a supervisory notice to Catalyst on 17 August 2010, which said the firm presented a risk to consumers by continuing to conduct activity in respect of new business in products linked to investment issued by ARM. However, the FSA did not make this notice public.
Last year, the FSA’s former managing director Margaret Cole (pictured) labelled life settlement funds as toxic.
In December last year following Cole’s statement, EEA Life Settlements fund was suspended after investors tried to withdraw their assets.