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New action group targets IOM fund industry and regulators for criticism
A new action group, Premier Shareholders Association (PSA), has commenced a determined lobbying campaign designed to embarrass, among others, the Isle of Man Government and regulators into admitting all has not been well in the establishment, management and regulation of certain parts of the Island’s fund industry; and to pay compensation in the same way as it proposes to for depositors in failed banks.
Much of the group’s criticism has centred on collective investment schemes, and in particular on an Experienced Investor Fund (EIF) - the Premier Low Risk Fund PLC; an IOM registered company and licensed fund.
The group is claiming to have evidence of deception and mis-selling, which it says it has brought to the attention of the company, the fund managers, the auditors, the IOM Financial Supervision Commission (FSC), the IOM Office of Fair Trading, Financial Services Ombudsman, yet they have all rejected any wrong-doing or the need to take any action.
The group has been bombarding officials at the FSC, the Institute of Chartered Accountants (ICAEW), the IOM Financial Crime Unit, the Treasury Minister, Allan Bell and the Chief Minister, Tony Brown with emails setting out their grievances; but it appears their concerns are now falling on deaf ears.
The group has also written to the International Monetary Fund (IMF) who is due to publish a report on the IOM’s regulatory framework later this month.
The group’s main beef is that the fund’s promoters were promising capital ‘guarantees’, and ‘security’, yet when the investors’ capital investment began to ‘shrink’, and they sought to recover their capital, they had to accept a, previously undisclosed, ‘exit penalty’ of about 30%.
The FSC’s view is that somewhere, whether it was clear or not, in the small print, of the offer or contract document, there would have been a clause that enabled the company to make this ‘exit charge’. It also seems their view that investors - who were supposed to be ‘experienced’ investors, but in reality were often pensioners looking to generate some income from their capital - should have been more careful where they put their money and will now have to live with their decisions.
This seems a bit rich when so called professional and sophisticated investment managers piled billions of pounds of customers’ money in to funds run by Mr Madoff and lost most, if not all, of it.
Incidentally, a very good article appeared on the ‘timesonline’ last week by Edward Fennell, entitled: ‘Fraud: the public are in a mood for show trials of guilty managers’. In it he wrote: “It is still a moot point whether the excesses and light-touch regulation of the past decade actually fostered a culture of fraud or merely allowed it to go undetected….. So in many cases it is the liquidators who are the first to stumble across what may seem like fraud as they peer at all the leakages in the finances. They then call in the lawyers to investigate what has been going on.”
He also identifies hedge funds as having come under particular scrutiny, as this is where some of the fraud has been going on undetected for years, and it is interesting to note that in the latest Quarterly Report on the Island’s economy it states: “There has been some toll on hedge funds particularly in the UK and USA, though the Isle of Man has so far weathered the storm well. The Isle of Man up to end of June 2008 managed an increase in fund assets of close to $4bn, bringing the total to a healthy $58 billion.”
The Manx Herald wonders if the FSC has any idea if any of the people responsible for these funds are running a similar scam to Mr Madoff. To see the full article go to: http://business.timesonline.co.uk/tol/business/law/article5466873.ece
And why should people who invested in savings plans and funds etc be treated any differently to people who put their money, and it could be said, ‘speculated’ just as much, in Kaupthing Singer Friedlander Bank etc?
The Manx Herald would be in favour of ‘caveat emptor’ if it was applied fairly and consistently, but it is not.
However, the Manx Herald certainly doesn’t support the idea of the IOM Government handing tax payers’ money over to everybody that has ‘lost’ money through doing ‘business’ with IOM ‘businesses’; but it certainly does support any campaign that will help the Island clean up its act and improve its image.
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We honestly believe that the IOM Government should pay in full all depositors that have lost money with KSF(IOM).
We are 64 years old and have retired this year, we have lost over $550,000 with this bank through no fault of our own.
Our life has changed dramatically since October 7th 2008. We have worried endlessly for the last three months about our future. All we are asking for is what is rightfully ours.
Banking in the IOM is the worst mistake we have ever made.
When the pensioners’ supposedly “secure and guaranteed capital” suffered a serious decline in value, their attempts to rescue their life savings were thwarted by Premier’s directors introducing a previously undisclosed 29% “exit penalty”.
The Isle of Man government claim that the island’s financial services industry is “open, transparent and well regulated”. Try telling that to the hundreds of elderly people, some in their seventies and eighties, who lost a considerable amount of their lifesavings thanks to Premier’s misleading claims/exit penalty all overseen by the Isle of Man government! Who is the government kidding?
Premier can do this because they know that the Isle of Man regulatory authorities will not lift a finger to prevent them – protecting the Island’s major industry is preferred to upholding the legal rights of elderly investors.
A triumph of politics over justice – never mind that in the process pensioner’s lives are ruined.
Premier claim that they are “professional” financial advisors. This is a false claim.
The claim “Low Risk” was first placed in the public domain by Premier’s directors. A Jersey High Court has ruled an investment fund similar to Premier’s is “High Risk”.
The directors were also the first to claim that pensioner’s “Capital” would be “Secure and Guaranteed” – claims later repeated by Premier’s “introducers” who have since admitted that they did not understand the fund. Blame Premier, not the “introducers”.
Nobody was aware of the 30% exit charge which the directors have levied for over six years simply because Premier never disclosed it. The proceeds of these charges are described by the directors as “redemption penalty income” and they have raised over £5 million in the last two years alone. They are illegal.
Some of the £1 million referred to by Colin will go towards, paying Premier’ “introducer’s fees” via the Caribbean. Since 2002 the directors have transferred approx. £6 million to these secretive companies and account for the money as “introducer’s fees” – yet the fund has been closed for over two years and no longer requires any “introducing”.
Nobody, apart from the directors, really knows where this money is going. Meanwhile hundreds of elderly pensioner’s continue to suffer the trauma of losing up to half of their “capital”.
So much for a “low risk, secure and guaranteed” Isle of Man based investment fund!
However I am against theft and abusing the elderly or ill-informed out of their life savings by professionals who should have a duty of care, much like a doctor or lawyer.
Besides being against excessive regulation I am also against the legal structures that enable crooks to avoid personal responsibility by hiding behind limited liability and other such devices. Scrap the lot and let people be brought to book for the theft and misery they cause by relieving others of their assets would be my suggestion.
As a member of the Costa Del Sol Action Group I would invite you to see some of the people who have been reduced to misery and despair while their "financial advisers" who brought them to this situation laugh all the way to the bank all the while checking they have not carelessly left some wealth behind.
The Premier Low Risk Fund PLC - is not a low risk fund!
This is an 'experienced investor' fund, which the managers have seemingly allowed slick, unqualified, unregistered, commission driven salespeople to 'peddle' to pensioners and vulnerable people, as a suitable low risk investment for their life savings!
Shame on them all.
A total failure of government regulation.
However I am against theft and abusing the elderly or ill-informed out of their life savings by professionals who should have a duty of care, much like a doctor or lawyer. It has become my perception that a trustworthy financial adviser is almost a contradiction in terms and that the whole industry is in severe disrepute as a result of schemes which have destroyed the wealth of investors. Promoters can say nothing illegal was done, which I think can often be challenged, but whatever, it is certain the well being of the mainly OAP investors was not a significant concern in many of these operations.
Besides being against excessive regulation I am also against the legal structures that enable crooks to avoid personal responsibility by hiding behind limited liability and other such devices. Scrap the lot and let people be brought to book for the theft, mis-selling and the misery they cause in relieving others of their assets, would be my suggestion.
As a member of the Costa Del Sol Action Group I have personally seen the despair and destroyed dreams of those who have lost their life savings to smooth talking financial salesmen while these salesmen, or financial advisers as they like to be called, who brought them to this situation, laugh all the way to the bank. All the while checking they have not carelessly left some wealth untapped behind.
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