InvestmentsJun 18 2013

Axiom legal fund distributor in liquidation

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Advisers could face up to a £100m hit to their FSCS bills after the UK-based distributor of the stricken Axiom Legal Financing fund was placed into liquidation.

Taylor Moor was last week forced to cease trading and Sheffield-based P&A Partnership was appointed as liquidator.

The FSCS has yet to confirm whether it will compensate investors, but if FCA-regulated Taylor Moor cannot meet any claims against it then the compensation scheme may be forced to pick up the tab.

Taylor Moor marketed the fund - which lent money to ‘no win, no fee’ lawyers - to UK investors and advisers. The Axiom fund, an unregulated collective investment scheme based in the Cayman Islands, was suspended in October.

Brendan Guilfoyle, partner at P&A, said: “Taylor Moor raised substantial investment for the Axiom fund over the course of 2011-12. However following [media reports] alleging fraud and mismanagement at Axiom, investors sought immediate redemption of their funds, resulting in significant lost revenue for Taylor Moor.

“Taylor Moor spent in the region of £150,000 in legal fees trying to protect its position and ensure the appointment of receivers at Axiom. However it was unable to replace the lost revenue and exhausted its reserves.”

The Axiom Legal Financing fund was placed into receivership in February. The fund’s investment manager, Tangerine Investment Management, was sacked from its role in November 2012 following the suspension of trading in the fund’s shares.

Grant Thornton, which is now running the fund, is attempting to contact investors but said in May that it had been “frustrated” because of poor record-keeping.

Separately, former Tangerine director Tim Schools remains under investigation by the Solicitors Regulation Authority (SRA) for a number of alleged breaches of the Solicitors Code of Conduct. The SRA has referred his case to the Solicitors Disciplinary Tribunal, where it will be heard in due course. The allegations are as yet unproven and Mr Schools denies any wrongdoing.

Mr Schools resigned from Tangerine in October shortly before the Axiom fund was suspended from trading. Tangerine was placed into liquidation in April.