Castlestone Management Inc products in offshore probe
Castlestone Management Incorporated has become involved in a regulatory investigation in the British Virgin Islands (BVI) after the watchdog there launched a probe into its funds, Investment Adviser can reveal.
The BVI’s Financial Services Commission (BVIFSC) has brought in accountancy giant Grant Thornton to investigate the fees and expenses being charged by eight funds managed by Castlestone Management Inc and domiciled in the offshore financial centre.
Grant Thornton has also been instructed to probe the BVI funds’ internal controls and corporate governance and the independence of their directors. The BVIFSC last week confirmed that the investigation, which was initiated in the second half of last year, was still ongoing. (*But see footnote, below, for an update on the regulatory investigation referred to in this article, which concluded in 2013 with no adverse findings.)
The BVIFSC also last year issued a directive obliging a total of 18 BVI-based funds run by Castlestone Management Inc to provide full details of their activities on a weekly basis.
The funds were instructed to refrain from paying certain fees and expenses without written consent. That directive continues to apply, the BVIFSC confirmed last week.
The BVI action continues a year after the FSA, assisted by the City of London police, raided the UK offices of Castlestone Management Limited, a separate entity.
According to the BVI company’s website, Castlestone Management was founded by former Macquarie Bank USA president Angus Murray (pictured). Mr Murray subsequently helped launch a series of Dublin-based funds managed by Castlestone Management Plc – a separate entity to Castlestone Management Inc – and marketed partly to UK retail investors.
In June 2011, it was announced that Irish regulators had temporarily suspended three of the Dublin-based funds. The FSA raided the offices of UK-based Castlestone Management Limited – a third company – in July last year.
In August, it was announced the Dublin-based funds of Castlestone Management Plc were being shut down. Mr Murray later said he was relocating to the BVI to focus on Castlestone Management Inc. Castlestone Management Ltd went into administration in October.
Castlestone Management Inc said the BVIFSC investigation was routine. It said it would expect its funds to be reviewed from time to time, especially since the BVI regime was recently toughened up under the Securities and Investment Business Act (SIBA).
A spokesperson said: “It was prudent, a year ago, for the BVI regulator to review Castlestone Management Inc’s funds as part of a normal process following the interactions with other regulators. There has been no negative impact on the funds and they have continued to trade normally.