Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and 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 Navigating geopolitical risk with ETFs

Navigating geopolitical risk with ETFs

ETFGI’s Deborah Fuhr on how investors can use exchange-traded funds to position their portfolio.

Play Sarasin’s Boucher: why I like salmon with chocolate

Sarasin’s Boucher: why I like salmon with chocolate

Henry Boucher, manager of the £129 million Sarasin Food & Agriculture Opportunities fund, explains why he is gobbling up salmon and chocolate stocks.

Play Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Libby Ashby and leading wealth managers analyse what the Alibaba IPO hype means for Chinese equities, slowing growth of the UK economy and whether there’s anything left to play for in the European sovereign bond market.

Your Business: Cover Star Club

Profile: Barclays' former advisory boss on his move into property

Profile: Barclays' former advisory boss on his move into property

On paper, Rick Denton might have been expected to finish his career in banking

Wealth Manager on Twitter