Chairman of Cru Investment Management, which marketed investment funds that have been suspended for almost a year, makes allegations of improper behaviour against manager Arch suspended by the Financial Services Authority last year has written to the Serious Fraud Office outlining his fear that the investment managers of funds he marketed and promoted may have behaved inappropriately and contributed to the funds’ demise.
Jon Maguire, a colourful businessman who is chairman of Cru Investment Management, made the allegations to the SFO four weeks ago. They are vigorously denied by the investment manager, Arch Financial Products, which points out that its offices have not been raided by the SFO and that a series of checks by accountants PricewaterhouseCoopers have found nothing untoward in its behaviour.
In a letter to the SFO seen by the Observer newspaper (UK), Maguire claims a direct property investment made by Arch ran contrary to its status as a “fund of funds” – an investment vehicle that takes stakes only in other investment vehicles. In addition, Maguire also alleges that Arch made a huge investment with Cru funds in a Greek shipping company. The size of the investment, claims Maguire, ran contrary to what should have been a diversified investment strategy.
Farrell also rejected these allegations. He said that Arch invested in a combination of fund-of-funds and direct investments, and that the exposure to the Greek shipping company was overstated. Also, he said that money was invested in a range of different ships rather than a single entity.
The SFO is not investigating Maguire’s concerns but is understood to have suggested that the FSA continue to monitor the situation. An FSA spokesman said: “We have been working very closely with the firm and the regulators. We have been closely involved in this.”
As arguments rage over the circumstances of Cru’s demise, the thousands of people who invested money in supposedly low- to medium-risk funds may finally get some of their money back in the next three weeks.
After finding that the value of the assets was substantially lower than previously published figures, Capita has applied to the FSA to wind up the funds, and expects to make the first payment to investors before the end of February.
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