Split caps tell FSA they will compensate investors

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The Independent Online

The majority of the 21 companies at the centre of the split capital debacle have told the Financial Services Authority they are willing to pay compensation to the thousands of investors who lost money when many of the trusts collapsed.

The majority of the 21 companies at the centre of the split capital debacle have told the Financial Services Authority they are willing to pay compensation to the thousands of investors who lost money when many of the trusts collapsed.

More than 10 companies involved with splits were thought to have responded to a deadline of last night set by the FSA, saying they were willing to thrash out a compensation plan. They will also be publicly named and shamed by the regulator.

The move comes after a meeting on 2 March between John Tiner, the chief executive of the FSA, and the group of 21, including fund managers and brokers.

Mr Tiner told the group that during its investigation the regulator had amassed evidence of collusion between a "magic circle" of fund managers, which had allegedly invested in each others' trusts in order to artificially inflate their share prices.

However, most have said they will only co-operate with the regulator if it agrees to certain conditions. They want the settlement to be final so that individual fund managers cannot be pursued by the regulator in separate litigation.

They also have said they will not sign up to the FSA plan if it includes a legal admission of guilt of collusion, because they fear that would open the flood gates to civil litigation by investors.

Those at the meeting with the FSA included Aberdeen Asset Management, the largest provider of split caps, Exeter Investment, BFS and Jupiter. Brokers that attended included HSBC and UBS.

However, other companies that attended the meeting responded to the regulator last night by denying that they were guilty of collusion and refusing to sign up to a "declaration of intent" to come up with a compensation plan.

The regulator has appointed three legal experts to mediate a plan with those who have signed up, including Lord Alexander of Weedon, the former chairman of NatWest.

The other two are Anthony Willis, who was partner in the City law firm Clifford Chance for 25 years and is an expert in mediation, and David Ashton, a director of the Law and Economics Group, who has worked for many years investigating professional negligence.

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