FSA to investigate Keydata “missing assets”

The Financial Services Authority (FSA) has announced it is in discussions with the Serious Fraud Office regarding “missing assets” in several Keydata Investment Services products.

On June 8 the FSA applied to have Keydata Investment Services placed into administration on the grounds that it was insolvent.

PricewaterhouseCoopers (PwC), the appointed administrator dealing with Keydata, today announced that following its initial findings the company can no longer be sold as a whole. PwC has also suspended certain interest payments and certain redemption rights as a result of concerns over some Keydata products.

The reason for this action it that PwC says it has become aware that income on seven Keydata Secure Income Bond products invested through SLS Capital, a Luxembourg-domiciled investment vehicle, has not been paid since October last year. The missing assets amount to £103m.

PwC says it also identified that early redemptions of these products have been dealt with in “an irregular fashion”.

It is understood that 5,500 investors are affected. According to the FSA, if it emerges Keydata caused customers to suffer a financial loss and cannot meet its liabilities, the Financial Services Compensation Scheme (FSCS) may be able to help.

PwC says that no investor has so far suffered, as the gap was filled by Keydata’s own corporate funds.

Dan Schwarzmann, joint administrator and partner of PwC, said in a statement: “We are very disappointed not to have been able to effect a sale of the business as a going concern as this would have provided some much needed stability for investors, employees and creditors.

“We understand how worrying this new information must be for investors, but would like to reassure all of them that we very much have their interests at the forefront of our minds as we seek to fully understand all the issues. We are working very hard in conjunction with the FSA and other authorities to obtain information regarding the whereabouts of the underlying funds in SLS.”

Keydata was unavailable for comment.

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