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 JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Your Business: Cover Star Club

Profile: 'new normal' now is as dangerous as when it was applied to tech

Profile: 'new normal' now is as dangerous as when it was applied to tech

7IM's CIO Chris Darbyshire says he has been re-energised by his new role, but has little time for 'new normal' doom-mongers

Wealth Manager on Twitter