Compensation Package for Arch Cru Funds Investors Inked
Investors of Arch cru Funds can now receive a full compensation package following discussion between the Financial Services Authority (FSA) and other entities.
The FSA, Capita Financial Managers Limited (CFM), BNY Mellon Trust & Depositary (UK) Limited (BNY) and HSBC Bank plc (HSBC) confirmed the voluntary establishment of a £54 million package, which will be used to make payments to eligible investors in the Arch cru Funds.
The voluntary establishment of compensation package was reportedly backed by UK Prime Minister David Cameron who promised to put “further pressure” on the regulator if it failed to report its findings to investors by June, according to an exclusive report by IfaOnline news.
Investors will also see a return of a substantial part of their investment to them. The discussion related to the CF Arch cru Investment Funds and the CF Arch cru Diversified Funds.
In March 2009, the Arch cru Funds were suspended due to insufficient liquidity in meeting the expected redemption requests related to the Investment Portfolio. At the same time, Arch cru’s assets have plummeted by around 40 percent in value.
The FSA said the risk of that illiquidity was spreading to the other sub-funds, given the overlap of investments in the other sub-funds and their similar investor profile.
The Investment Fund was valued at £255.5 million and the Diversified Fund at £107.8 million during the time of suspension.
Since then, partial distributions have been made on February 20, 2010, July 30, 2010 and December 23, 2010 that totaled £54 million.
The last published valuation on March 31 valued the Investment Fund at £113.1 million and the Diversified Fund at £35.8 million.
“This residual value may increase or decrease in the future,” the FSA said in a statement.
“Investors will, of course, have a choice whether to accept the offer of payment out of the payment scheme, which has been established by the firms. If they accept, it will be in full and final settlement of any claims or any remedies they may consider they would otherwise have against the firms.”
The compensation package was considered by the FSA as “fair and reasonable,” providing assurance for investors that the return of value to them will be accelerated.
The package is currently estimated to be on average about 70 percent of the published net asset value of the Arch cru Funds as at the suspension of dealings on March 2009, representing a significant proportion of their investment when added to the sum already paid to them.
The FSA is considering the role of other parties in relation to the Arch cru Funds.
The FSA will discuss the payment scheme with the Financial Ombudsman Service (FOS) to provide full details of how the compensation package will work. CFM will manage the compensation package and will contact those investors who are invested in the Arch cru Funds as of May 31, 2011.
Further information will be released before the end of August 2011.
The CF Arch cru Investment Funds and the CF Arch cru Diversified Funds are two FSA-authorized non-UCITS retail schemes, commonly called “NURS”. The Investment Fund has two sub-funds, the CF Arch cru Specialist Portfolio and the CF Arch cru Investment Portfolio.
The Diversified Fund has four sub-funds, the CF Arch cru Balanced Fund, the CF Arch cru Finance Fund, the CF Arch cru Global Growth Fund and the CF Arch cru Income Fund.
CFM is the Authorised Corporate Director of the Arch cru Funds. BNY is the depositary of the Investment Fund and HSBC is the depositary of the Diversified Fund.