Split caps offender with no cash for investors paid directors £18m

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The Independent Online

The directors of BFS Investments, one of the four companies ejected from the split-capital investment trust settlement talks after claiming they did not have sufficient assets to make a proportionate contribution, paid themselves more than £18m between 1996 and 2003, according to documents posted at Companies House.

The directors of BFS Investments, one of the four companies ejected from the split-capital investment trust settlement talks after claiming they did not have sufficient assets to make a proportionate contribution, paid themselves more than £18m between 1996 and 2003, according to documents posted at Companies House.

The news came as BFS faces its first threat of legal action since it was excluded from the FSA's settlement process last month.

A group of high net worth individuals, who say they lost money at the hands of BFS, plan to pursue the company and its founder and principal director, Tony Reid, to try to recoup their losses. Collectively the investors, who wish to remain anonymous, are believed to have lost a seven-figure sum.

Martin Harris, a solicitor with the Surrey-based practice, Oakwell, which is representing the investors, said: "Possibly unlike many smaller investors, my high net worth clients have lost significant sums of money and have the resources to pursue remedies against both BFS and Tony Reid personally."

Although Mr Reid claims to have spent his salary from previous years, Land Registry documents reveal he raised more than £5m through the sale of two UK properties in 2003.

Mr Reid said: "I don't think this sort of thing should be played out in the press, and you have to wonder why they feel they want to talk to the press. We've got Norton Rose as our legal advisers and they will be dealing with this, and on this particular client we don't think they've even got a loss. We think their losses came afterwards. [Norton Rose] do not believe we've got anything we can't defend.

"Anyone who wants to make a claim against us, we will look at it, but we will rigorously defend it. And if you look at our accounts, you will find that we will not be making any provisions for any potential claims."

Mr Reid said he had not been contacted by the FSA since it settled with 18 of the firms involved in the split-cap sector, but said he was delighted a settlement had been made on a no-blame basis. "That's how it should be because we don't think anyone did anything wrong," he said. "The FSA has obviously decided there isn't much of a case. You would have thought that if they did have a case, they would have had a statutory obligation to pursue it."

The FSA intends to continue talking to BFS, and has threatened formal enforcement action against Mr Reid and his company if an agreement cannot be reached.

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