The investigation was disclosed as Sedgwick, the insurance broker, announced a pounds 110m deal to buy Noble Lowndes from TSB Group, which acquired the firm when it bought Hill Samuel in 1987.
Noble Lowndes uncovered the possible irregularities last year and reported them to Imro. Two consultants from the firm's personal financial services division are alleged to have broken rules on the suitability of investments and switching - unnecessary 'churning' of investors from one product or company to another.
Imro's investigation, which began in April, is looking at the deficiencies of Noble Lowndes' compliance procedures and may order the firm to pay compensation to investors who suffered a loss. TSB would not say how much money or how many investors were involved.
TSB has given Sedgwick an indemnity against any disciplinary fine or compensation that Imro orders Noble Lowndes to pay.
The purchase document says Noble Lowndes 'has already implemented and is implementing further significant changes to its systems and procedures in order to remedy compliance weaknesses'.
Noble Lowndes is a leading adviser on pensions and employee benefits, and has 2,750 staff in 44 offices worldwide. It made a pre-tax profit of pounds 11.5m in its last full year. Sedgwick is acquiring it with net assets of pounds 30.9m.
Sedgwick is funding its purchase with a one-for-five rights issue of shares at 165p each, which will raise pounds 143.7m. The insurance broker is spending up to a further pounds 17.8m on Arvid Bergvall, a large Scandinavian broker of marine insurance. Arvid made pounds 2.1m profit on pounds 6.4m of turnover last year.
Sedgwick also reported first-half pre-tax profits up from pounds 51.7m to pounds 54.7m. Brokerage income rose 4 per cent to pounds 352.4m, out of total revenues of pounds 401.2m. Expenses rose 5 per cent, partly because of acquisitions.
Stuart Tarrant, Sedgwick's finance director, said the purchase of Noble Lowndes would lift profits from employee benefits to about 20 per cent of the group total. These consultancy profits are more stable than earnings from insurance broking. Sedgwick's employee benefits business made an pounds 8.1m pre-tax profit last year.
The enlarged business will be called Sedgwick Noble Lowndes.
TSB said it was selling because Sedgwick had offered a good price; it was paying a price-earnings multiple of 19 and more than three times net assets. Although talk of a deal has surfaced in the past, Mr Tarrant said Sedgwick began serious talks only in May.
He said some Noble Lowndes offices in the US may have to close, but did not envisage significant redundancies.
Transamerica International, a large Sedgwick shareholder, is taking up its rights to the A ordinary shares, which carry additional voting rights, but will place its entitlement to the ordinaries. This will leave Transamerica with a 21 per cent stake in Sedgwick.
Sedgwick has paid an unchanged interim dividend of 3p a share.
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