The stricken ARM Asset Backed Securities life settlements fund is facing liquidation after the Luxembourg regulator rejected an appeal from the fund’s board.
The move means the FSCS may decide this month to compensate UK-based ARM investors, including customers of defunct IFA firm Rockingham Independent, if there is no prospect of their full investment being returned.
Luxembourg’s appeals court this week rejected an appeal from ARM against the initial decision by the CSSF, the country’s financial regulator, to refuse the firm permission to trade. The original decision was made in August 2011 and it has taken two years for the CSSF to process and respond to the appeal.
In a statement on its website the CSSF said the appeals court’s latest decision “is final and cannot be appealed”. A commercial court will now be appointed to liquidate ARM.
In an update to investors in May the board said a liquidation “would see the smallest return possible to all”. The FSCS is due to announce its final decision on Rockingham compensation this month.
The board of ARM has already succeeded in selling off its portfolio of second-hand life insurance contracts to an Irish-listed company, and is understood to have prepared a portfolio of cash to rebuild a new fund. However, the liquidation is likely to scupper these plans and force UK investors to seek compensation either from their advisers or from the FSCS.
