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Press Release - 2 September 2003

Split Capital Closed Ended Funds review by Jersey Financial Services Commission

The Jersey Financial Services Commission today announced that the initial stage of its review of split capital closed ended funds has been completed.

The Commission appointed inspectors (partners of accountants RSM Robson Rhodes together with a UK Queens' Counsel) 8 January 2003 to review split capital close ended funds based, administered and sold in Jersey.

The review team was to consider the role and actions of the Directors of the Jersey based funds, particularly with respect to investment decisions. They were further briefed to look closely at the compliance of the managers with Jersey law and regulatory requirements as well as with the terms of the constitutive documents. The review further covers the marketing of the funds in Jersey.

Progress to date includes:

  • Co-operation with other regulators in both the UK and Guernsey as some of the funds based in Jersey invested in funds based in the UK. In addition, investment management for a number of funds was undertaken in the UK and common entities are regulated across all jurisdictions.
  • The initial stage of investigation has been completed into the sale to local and international investors of funds by Jersey based brokers. This element of the investigation will continue to enable the Commission to be satisfied no mis-selling has occurred. Further information from investors and brokers will be required before final conclusions can be drawn.
  • The investigation into the management of the funds themselves is progressing with a detailed review and analysis of key information.

The firms under investigation have not been subject to any regulatory sanction by the Commission and continue to hold licences under the regulatory laws whilst the investigation continues.

Investors are being reminded that if they have a complaint about the marketing material relating to the split capital closed ended funds, or about the advice they were given during the sales process, they should complain formally in the first instance to the firm through which they made their investment.

The investigation is being carried out for the purpose of enabling the Commission to fulfil its statutory responsibilities which includes ensuring regulated institutions conduct their business in a manner which reduces the risk to the public of financial loss due to dishonesty, incompetence or malpractice by, or the financial unsoundness of, persons carrying on the business of financial services in or from within the Island.

Depending upon the outcome of the investigation, the Commission may consider using a variety of regulatory powers, only one of which relates to restitution in the respect of the position of investors. Accordingly, Investors who believe they have a legal claim in relation to the marketing material for the split capital closed ended funds or investment advice given, should consult their own lawyers, particularly in relation to the time within which they must commence any legal proceedings. This is important because Jersey customary law introduces a cut off time for actions, which any private investor(s) may choose to take up individually (or collectively).

For further information contact:

Richard Pratt
Director General
Jersey Financial Services Commission

Telephone: +44 (0) 1534 822011
Email: r.pratt@jerseyfsc.org

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