Trust hires former Law Lord to pursue Aberdeen over splits

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Aberdeen Asset Management came under more pressure yesterday over its involvement with the stricken split-capital investment trust sector when a large ex-client said it had hired a former senior law lord to pursue a multimillion-pound claim against the company.

Aberdeen Asset Management came under more pressure yesterday over its involvement with the stricken split-capital investment trust sector when a large ex-client said it had hired a former senior law lord to pursue a multimillion-pound claim against the company.

Real Estate Opportunities, a Jersey-based trust, has taken on Lord Browne-Wilkinson, a former senior law lord, to be chairman of a committee it has formed to investigate its case against Aberdeen. It has also hired the City law firm Lovells.

REO, which lost £165m after investing in a string of Aberdeen vehicles, is pursuing the company for a portion of those losses. On the basis of its findings, REO concluded that Aberdeen was responsible for part of the problem. REO sacked Aberdeen as manager last year. It hired Invesco, since then the net asset value of its ordinary shares has risen 33 per cent.

The trust has stepped up pressure on Aberdeen at a time when firms involved in split-caps thought they had won a breathing space on the issue, having derailed plans by the FSA to hold a meeting to discuss possible compensation payouts on Monday. The regulator is trying to galvanise the 21 fund managers and brokers that offered splits into handing out compensation after investors lost thousands of pounds when the sector was hit by the fall in the stock market in 2001 and 2002.

The representatives were called to a meeting last month at which John Tiner, the chief executive of the FSA, said the regulator had amassed evidence that a "magic circle" had propped up the share price of certain split caps by investing in each other's trusts, including through rescue rights issues.

While some industry figures trumpeted the cancelled meeting on Monday as evidence the FSAhad a weak case, others said the regulator remained confident that it would hammer out a compensation package.

Daniel Godfrey, of the Association of Investment Trust Companies, said: "I don't think the delay of the meeting is a major setback."

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