Connaught looks to wind up two Ucis funds
The board of Connaught Asset Management is proposing to wind up its Income Series 2 fund, which is currently suspended from trading on the Channel Islands Stock Exchange.
Mortgage Strategy, Fundweb’s sister publication, understands Connaught has also taken the decision to wind up its Income Series 1 fund. The Income Series 1 fund has assets of around £118m, while Income Series 2 has assets of around £20m. Both funds are unregulated collective investment schemes (Ucis).
The board of directors met yesterday to discuss an auditor’s report into the future of the Income Series 2 fund, resulting in the decision to wind up the fund.
Bridging lender Tiuta is backed, in part, by both funds. Connaught will now take over the lender’s loan books associated with the funds. It aims to return investors’ money as the loans redeem.
Connaught announced in May that it had contacted investors to tell them the fund was unable to pay their scheduled quarterly interest payments after bridging lender Tiuta told the asset manager it would be late paying its own interest payments. (article continues below)
It was looking to resume normal dealing on the fund by May 14, after it had drafted in BDO LLP to conduct and audit of the Income Series 2 fund. However, the firm’s board of directors agreed at a meeting on May 21 to continue the suspension of the net asset value of the fund and the issue and redemption of units in the fund.
The Financial Services Authority (FSA) issued a warning to people who have invested in the two funds from Connaught in May 2011. The regulator said it believed the way they have been advertised could be misleading.
Connaught subsequently changed the litereature - a summary comparison document - following the FSA’s concerns.
Mike Davies, chairman of Connaught, was the compliance officer of Tiuta, which pulled out of regulated mortgage business in May last year, between August 2008 and July 2010.
In light of the proposal to wind up Income Series 2, the annualised interest rate payment to unit holders scheduled for July 2012 will not be paid.
The administrator will be returning any subscription monies received and held by it pending the next dealing day to applicants.
Earlier this week, Tiuta announced that it was launching a number of new products after securing a new funding line from a central London investment fund.
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