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Keydata directors claim they are victims of fraud
The directors of Keydata Investment Services have claimed that they are the victims of fraud after a number of issues with underlying assets were identified by administrators.
A statement from the firm revealed that issues relating to bonds issued by SLS Capital in 2005, after being approached by a company controlled by fugitive David Elias, who died in May 2009.
It said the bonds had been distributed to retail investors through IFAs before Keydata had begun to assist in distribution.
The company said it had been approached by an agent of Elias-controlled BWT Capital to assist distribution of SLS bonds in 2005.
A warrant had been issued for Elias - who resided in the Far East - prior to his death, relating to the collapse of Richbell group in 1997, which left more than 80 companies in liquidation.
SLS Capital was formed in Luxembourg by BWT Holdings and Ecoreal in 2004, and has three corporate directors: Universal Management Services, Monterey Services and Euro Management Services.
"Although there had been some delays in payment of income by SLS on its products in recent months, the directors only became aware this weekend that the underlying assets of SLS appear to have been liquidated," the statement added.
Approximately 5,500 investors - totalling £103m invested - are thought to be affected by issues related to SLS bonds, including seven Keydata Secure Income Bond products.
According to administrators PricewaterhouseCoopers (PwC), income on the products had not been paid since October 2008, with Keydata filling in income payments from its own reserves.
A statement from the administrator said that information it had received suggested that assets had been liquidated and may have been misappropriated.
Keydata directors said that they were "confident" that the issues relating to Keydata products are restricted to SLS bonds and are unaware of any problems relating to investments with Lifemark or Hometrak.
Yet, PwC has suspended income payments on a number of Hometrak products, while early redemptions on Hometrak and Lifemark products have been suspended.
The firm said it had fully co-operated with the regulator and the administrators and would be pursuing claims against third parties who had allegedly caused loss or damage to the company
The Financial Services Authority (FSA) said it was working closely with the Serious Fraud Office (SFO) about the potentially missing assets of the SLS bond products.
The news comes after PwC voiced concerns about a number of Keydata products and revealed it would not be able to sell the business as a whole.
Dan Schwarzmann, joint administrator and partner of PwC, said: "We are very disappointed not to have been able to effect a sale of the business as a going concern as this would have provided some much needed stability for investors, employees and creditors.
"We are working very hard in conjunction with the FSA and other authorities to obtain information regarding the whereabouts of the underlying funds in SLS.