The UK's Financial Services Authority (FSA) on Wednesday issued an update on the progress of collective settlement negotiations with the 21 fund firms and brokers involved in the high-profile collapse of several split-capital investment trusts in 2002.
The financial services regulator revealed that since its meeting on 2nd March with the chairmen and chief executives of the firms, there have been continuing discussions.
A number of firms have reportedly been provided with outlines of the cases that would be made against them, to assist them in considering their positions, on the basis that this information is treated as confidential.
Firms that have already indicated that they are willing to participate in the mediation process are now engaged in constructive discussions with the FSA about resolution of the issues, including payment of appropriate compensation.
Separately, the regulator revealed, a group of firms has held preliminary settlement discussions with the FSA on a confidential and without prejudice basis.
The FSA stated its belief that payment of £350 million as compensation would represent an acceptable amount in the context of these discussions, but revealed that the amount that those firms have indicated that they would be prepared to make available is so far short of what is necessary that the FSA does not intend to continue with these discussions.
The Authority additionally explained that it is continuing with its enforcement investigations against those firms that have refused to take part in the mediation and will begin referring cases to the independent Regulatory Decisions Committee in June. In the meantime, it expressed a willingness to involve those firms in the mediation process should they agree to take part on the basis proposed by the FSA.
The FSA pointedly repeated the assertion that it "has not made public the names of the 21 firms with which it has held discussions", making reference to the recent threat by New Star Asset Management to sue for defamation over remarks on the matter made by the head of the FSA's press division.
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