QROPS clients reported ‘devastated’ over latest suspended Trafalgar fund news

Investors who held stakes in a fund that is said likely to be about to be wound up are “devastated” by the news, according to a tax consultant who is representing them.

The news was reportedly broken to the investors in the Trafalgar Multi Asset Fund in the form of an email on 5 December from an executive with STM Fidecs, a division of Gibraltar-based, AIM-listed STM Group.

However, the company said the fact of the probable winding-up is not new, and that its own clients who are invested in the fund, at least, were informed of the fact some months ago.

STM, which was founded in 1989,  has specialised in qualifying recognised overseas pension schemes (QROPS) almost since they were created by the UK’s “A Day” pension rule changes in 2006.

In a statement issued this morning, STM said it was doing all that it could to help those of its QROPS clients who were affected by the Trafalgar fund’s collapse, including keeping them informed of the situation. It noted that there were understood to be clients of other QROPS and SIPP providers “who [had] also invested in this fund”.

An STM spokesperson stressed that the reason that the news of the Trafalgar fund’s pending wind-up appears to be coming from STM is because it has been “proactive” in keeping its members informed of the situation, not because STM investors had been disproportionately affected by the fund’s under-performance.

In the form email on 5 December, to an undisclosed number of Trafalgar investors who held their Trafalgar shares in an STM Fidecs trust – a copy of which has been seen by International Investment – STM explained that, some 11 months after “we were notified by the directors of the fund that they were suspending the fund until further notice”, these fund directors have now “served the fund managers notice to terminate their services”.

“Once this period of time is complete, the trustees believe that a liquidating agent will be appointed to wind up the fund”, the email said.

“The trustee is still waiting for details of the proposed agents, their action plan and timescales along with the costs associated with this service.

“Until this is resolved the trustee is unable to access the invested funds within the Trafalgar Multi Asset Fund.”

In a statement today, in response to questions about the matter, the STM Group said: “STM have a number of QROPS members who have received third party investment advice to invest their funds in the Trafalgar Multi Asset Fund, which has temporarily been suspended.

“The status of the fund and the appropriate next steps are being investigated,  both internally by STM and externally.

“The interests of our members is of paramount importance to STM and, as such, affected members have been kept informed throughout, and will continue to be updated as soon as further information becomes available.”

‘Green investments’

According to Angela Brooks, a Spain-based former accounting consultant and tax adviser who says she is representing a number of STM/Trafalgar Multi Asset Fund investors, the Trafalgar fund had been promoted to investors as being “a highly diversified portfolio committed to green investments, with a focus on renewable energy technologies”.

She said investors who have lost money in the fund are “devastated” to learn that what they thought was a low-risk investment for their pension now appears to have lost them a considerable, if for now unknown, portion of their retirement pot.

Brooks, who is also director and founder of Pension Life, an organisation which exists to help victims of pension scams, said “hundreds” of UK investors were invested in the Trafalgar Multi Asset Fund.

STM and the other QROP schemes and self-invested personal pension schemes that haveTrafalgar Multi Asset Fund investors in them, she added, “should never have accepted” these low-risk investors, let alone “put them into a single, high-risk UCIS [unregulated collective investment scheme]”.

Of the £20m these investors put into the fund, Brooks said, exactly how much remains is not known, and will not be until the winding up of the business has been completed.

Little known about Trafalgar fund

Little is publicly known about the Trafalgar Multi Asset Fund, which is said to be unrelated to be unrelated to Trafalgar Asset Management, a UK hedge fund firm founded in 2001.

The fund’s investment manager was Victory Asset Management, run by James Hadley and Tom Biggar.

A confidential report that was prepared earlier this year for the Trafalgar fund’s shareholders, a leaked copy of which was seen by International Investment, shows that the fund launched in 2014 with its initial investments including loan notes issued to Quantum Global Capital Ltd, a fund which invests in Dolphin and Dolphin Capital 200 Projekt GmbH, a German property development fund.

The report which was dated 16 August, shows that the fund ran into problems almost at once, and that there were numerous discrepancies and gaps in the information being provided to those invested in the fund.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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