The founder of collapsed investment firm Keydata boss has launched legal action against the financial watchdog.
According to the Sunday Times, Stewart Ford (pictured) sent a letter to the Financial Services Conduct Authority (FCA) last week outlining his intention to sue for £371 million.
In the letter Ford described the then Financial Services Authority (FSA) as ‘politically motivated’ in assault on the firm, labelling it an abuse of power.
Keydata plunged into administration in 2009 and left 30,000 investors sitting on aggregated losses of £450 million.
The firm, which specialised in structured products, was accused of mis-selling by marketing its funds as being ISA-compliant. Its position became untenable after it was ordered to repay £5 million in tax.
In the letter seen by the Sunday Times Ford argues the FSA was guilty of ‘malfeasance in public office’ and insinuated the regulator had an ‘ulterior motive’.
‘Your officers were seeking to promote some benefit to the public at my expense and that of Keydata,’ he wrote.
‘The purpose was to demonstrate the effectiveness of the FSA as a robust regulator in the wake of the financial crisis of 2008 and thus restore public confidence in the FSA.
‘The FSA’s actions as carried out by the investigation team were politically motivated and the outcome was predetermined.’
In it response the FCA said: ‘Disciplinary proceedings against Mr Ford continue and under these circumstances it is inappropriate to comment.’
The collapse of Keydata increased the burden on the Financial Services Compensation Scheme (FSCS), which began legal action against the firm in November 2011, although the case is yet to reach court.
The consequences have been far-reaching.
Last month reports emerged that US-based brokerage CRT Capital and two of its executives were facing a $100 million (£59 million) lawsuit by the liquidator for SLS Capital, the company which issued life settlement bonds which were marketed by Keydata.