Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

HSBC vows to fight £151m Keydata lawsuit

HSBC vows to fight £151m Keydata lawsuit

HSBC has vowed to fight a $250 million (£151 million) lawsuit, which alleges it aided fraud in relation to failed investment company Keydata.

The claim was filed to a New York court last week by Baden & Baden, which is the liquidator for life settlement vehicle SLS Capital, and has been backed by a group of 900 Keydata investors, according to The Financial Times.

SLS Capital issued life settlement bonds which were then marketed by Keydata.

The liquidator accused the US subsidiary of failing to spot a number of ‘red flags’ in the run-up to SLS Capital’s liquidation in 2009, and of playing a ‘critical role in the eventual demise of SLS’ and ‘failing to prevent’ a fire sale of the SLS portfolio.

The claim added that HSBC was the custodian of the life policies that underpinned the bonds but did little to correct misleading marketing material that said the bank was the trustee of the bonds.

HSBC said: 'We will respond by filing a motion to dismiss the complaint. As this is a legal matter, we have no further comment.'

This is the second legal battle launched by Baden & Baden in its role as SLS Capital’s liquidator.

In July it issued a claim against US brokerage firm CRT Capital for fraud, misrepresentation, negligence, breaching its fiduciary duty and unjust enrichment.

CRT was the financial adviser to SLS and at one stage owned 50% of its shares.

CRT  told the FT: ‘We believe the claims SLS is pursuing against CRT Capital are wholly without merit.

The lawsuit also follows proposed legal action by Keydata founder Stewart Ford’s who earlier this month outlined plans to sue the FCA for £371 million over the company’s demise.

In August Ford wrote to the regulator accusing its predecessor, the Financial Services Authority of a ‘politically motivated’ abuse of power arguing that it targeted Keydata as a means to restore its reputation as a ‘robust regulator’.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Boutique tapes: my business will never be sold

Boutique tapes: my business will never be sold

In the final part of our four part series we discuss consolidation and whether it's getting tougher for boutiques to survive.

Play Boutique tapes: are top managers better off at small firms?

Boutique tapes: are top managers better off at small firms?

In episode three of our series, boutique bosses discuss whether the best fund managers are more likely to thrive at smaller firms.

Play Boutique tapes: if you want a Ferrari, you have to pay for it

Boutique tapes: if you want a Ferrari, you have to pay for it

In the second part of our four-part series, boutique bosses are asked how they can justify the fees charged by active managers.

Read More
Your Business: Cover Star Club

Profile: how this boutique beat the big guns of wealth

Profile: how this boutique beat the big guns of wealth

This small west country offshoot of a local IFA scooped a 2018 Citywire award from beneath the noses of the national challengers

Wealth Manager on Twitter