FCA could be forced to reopen frozen ARM accounts

The FCA could be forced to reopen frozen bank accounts connected to the ARM Asset Backed Securities fund after lawyers in the UK and Luxembourg agreed the move was contrary to the regulator’s initial ruling.

The FCA’s predecessor, the FSA, froze six bank accounts in November 2011. The cash in the accounts relates to three tranches of investments in the Luxembourg-based life settlements fund which were never transferred to ARM to be invested, as the fund was by then suspended from trading.

However, lawyers have now decided that bonds were legally issued to investors and so money cannot be returned directly to those individuals. Instead the money is expected to be transferred to ARM and form part of a proposed restructuring of the fund. The board of ARM said it was seeking a meeting with the FCA to discuss the implications of the lawyers’ decision.

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The decision is another blow to investors seeking to redeem their investments who have been unable to do so since the summer of 2011 when the fund was suspended from trading.

Last week the FSCS said ARM investors who were advised by the now-defunct IFA firm Rockingham Independent would have to wait until September to find out if they will be compensated. The scheme had initially decided not to pay out on ARM investments but is now reconsidering.

The ARM fund has been denied permission to trade in both Ireland and Luxembourg but is close to completing a sale of its assets to Financial Credit Investments Limited.