Split Cap Fund Manager May Sue FSA For Defamation

by Robin Pilgrim, LawAndTax-News.com, London

25 May 2004

It emerged this week that New Star Asset Management is threatening to sue the United Kingdom's financial services regulator over remarks made by the head of its press division pertaining to the split capital investment trust debacle.

The Financial Services Authority has alleged that some 21 fund managers and brokers colluded to create a so-called "magic circle", which eventually led to the high profile collapse of several split capital investment trusts in 2002.

Earlier this year, FSA chief executive John Tiner suggested that the affected firms should give consideration to taking part in planned collective settlement negotiations which, according to Mr Tiner, were intended to ensure that investors receive compensation from firms where appropriate, and that the necessary disciplinary action is taken.

According to reports in the UK media, New Star was outraged when the FSA's new press chief, Rob McIvor suggested several weeks ago that the 21 investment firms had "ripped off consumers". Speaking to the Independent this week, a spokesman for the asset management firm explained that:

"We are deeply concerned that the FSA has pre-judged the whole issue of the splits investigation before it has even sent the evidence out, let alone before the cases have been heard through the proper channels."

However, the FSA has hit back, countering that: "At no stage have we ever named any of the individuals or firms involved with this issue".

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