Knight Williams, the failed investment adviser, has launched a bitter rearguard attack on the City's most senior financial watchdog for alleged failures that led to its collapse.
Delays by the Securities and Investments Board in assessing the compensation amount owed to hundreds of small investors precipitated Knight Williams' decision to go into liquidation, the directors claimed. They also said delays prevented some compensation being paid to clients months earlier.
Their scathing attack is contained in a report given to creditors at a meeting on Monday. Knight Williams said that after meeting potential claims against it of up to pounds 1.3m from at least 100 creditors, it should have more than pounds 1m to meet other, unspecified liabilities. These include the cost of compensating up to 400 former Knight Williams investors who claim they were poorly advised.
But KW said that its own estimate of the compensation to be paid to former investors had been pounds 150,000, while SIB's was enough for "the liabilities of KW to exceed its assets".
Yet SIB's view was given "without offering reasons for an assessment in any single case", the directors said.
A spokeswoman for the SIB yesterday dismissed the attack, saying that the regulator had acted throughout with the best interests of investors in mind.
Former investors face a long and bitter battle to have themselves recognised as creditors of the company, and thus claim some of the assets to be disposed of by the company's liquidators, Arthur Andersen.
Insolvency experts pointed out that this would be difficult, given that investors have to do more than simply establish a contract with Knight Williams.
Tony Stockwell, a partner at Stephenson Harwood, said: "In principle that can happen. But then each individual case must be looked at by a liquidator to assess whether they fulfil the criteria allowing them to claim a share of the assets."