FSA ignores events before 2001 in split cap inquiry

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The Independent Online

The Financial Services Authority's evidence of alleged collusion among the 21 firms involved in the split-capital investment trust débâcle is based entirely on conversations held after June 2001 - once the problems in the sector were already well under way, sources close to the investigation said.

The Financial Services Authority's evidence of alleged collusion among the 21 firms involved in the split-capital investment trust débâcle is based entirely on conversations held after June 2001 - once the problems in the sector were already well under way, sources close to the investigation said.

The revelation suggests that the FSA's case against the 21 is far narrower than the companies had originally believed, and will come as a disappointment to personal finance campaigners. The £350m in compensation that the regulator has demanded from the industry relates principally to losses suffered by shareholders as a result of efforts to shore up a split cap sector that was already failing.

The details have come as a surprise to many of the 21, who understood the FSA's allegations of collusion related, at least in part, to events leading up to the sector's collapse, before 2001. There has been stinging criticism of the way the trusts were set up and sold as low-risk investments.

Sources close to its investigation said the FSA has cited as its evidence against the industry a series of meetings between brokers and fund managers between June 2001 and October 2002, which the regulator says led to the alleged collusion. One of these was set up and chaired by the Association of Investment Trusts, the industry trade body.

The FSA's independent enforcement committee, the Regulatory Decisions Committee, will now hear the cases next month, with appeals likely to be heard at the Financial Services & Markets Tribunal next year.

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