Investments  

Connaught operator enters liquidation

Connaught operator enters liquidation

Blue Gate Capital Limited, one of the operators of the Connaught Income Fund Series 1, has entered liquidation only months after the regulator ordered it to pay £203,007 to investors.

Blue Gate Capital appointed liquidators yesterday (March 1) and the regulator will now move to make a claim as a creditor to recover its restitution order.

The City watchdog confirmed in December it had publicly censured Blue Gate Capital and told it to pay £203,007 in restitution to investors who lost money when the Connaught fund collapsed in 2012. 

Blue Gate Capital had until January 8, 2021 to pay the restitution to the regulator.

This came after the City watchdog spared Blue Gate Capital a £10m penalty for its failings because the company had "established it was in serious financial hardship".

The Connaught fund was an unregulated collective investment scheme run by Capita Financial Managers and, from 2009, Blue Gate Capital, providing short term bridging finance to commercial operators in the UK property market.

The fund went into liquidation in December 2012, with investors losing £118m in the process.

The £203,007 owed by Blue Gate capital reflected profits earned by the company as operator of the Connaught fund and was set to be distributed to investors by the FCA. 

The FCA found the operator had failed to carry out adequate due diligence on the fund prior to taking it on and neglected to investigate potentially serious issues of which it was aware. 

According to the regulator Blue Gate Capital also failed to communicate with investors in a way which was "clear, fair and not misleading".

An independent investigation into the FCA's own handling of the Connaught collapse, published in December 2020, warned its regulation of the fund was "not appropriate or effective". 

The long-awaited report found the City watchdog could have done more to protect investors, in a theme echoed in a similar investigation into the regulator's handling of the London Capital & Finance fallout.

Raj Parker, who led the investigation, did however credit the FCA for its part in recouping investor funds following the collapse. 

amy.austin@ft.com

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