FSCS delays payouts on property funds amid SFO probe

FSCS delays payouts on property funds amid SFO probe

The Financial Services Compensation Scheme is delaying making any decision regarding payments on claims against a trio of troubled property funds which are being investigated by the Serious Fraud Office.

Today (22 January) the FSCS said that it is “aware” that the SFO is currently undertaking investigations into three Stirling Mortimer funds, listing the No.4 Cape Verde fund, No. 6 Morocco fund and No. 7 Cape Verde II fund and that it is considering the implications of the SFO’s investigations.

Over recent months a number of claims against firms that are no longer trading for advice relating to investments in Stirling Mortimer funds have been received by the FSCS, the scheme said in a statement.

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The FSCS said: “FSCS is considering the implications of the SFO’s investigations. Until these investigations have been concluded, we are unable to provide decisions on claims involving these three funds.

“FSCS will provide further updates on our website as soon as we have more information.”

In July last year, FTAdviser reported the SFO was investigating an allegation of fraud against a number of investment funds operated by the troubled Stirling Mortimer Global Property Fund, a protected cell company with limited liability based in Guernsey.

At the time the SFO said the investigation was primarily focused on three SMGPF unregulated funds which operated between 2007 and 2011, including Stirling Mortimer No.4 Fund Cape Verde, Stirling Mortimer No.6 Fund Morocco and Stirling Mortimer No.7 Fund Cape Verde II.

In 2012, Stirling Mortimer Global Property Fund reached an out of court settlement with ELS International Lawyers and former ELS partner Joe Ezaz over €9.8m (£8.3m) that apparently went missing from the fund.

The fund’s legal High Court action was set to start in April 2012, but in a statement on the Channel Islands Stock Exchange, Stirling said that a settlement has been agreed, although it had not recovered the money missing from two of its sub-funds, No 4 Cape Verde and No 5 Spain.

The firm said that “other options” continue to be pursued to recover the balance and that it will continue to update investors.

The precise terms of the settlement remain private and confidential to the parties under law, according to the statement, which added that the settlement agreement was reached without any admission of liability or wrongdoing.