Suspended Trafalgar Multi Asset Fund 'to be wound up'

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The directors of the suspended, Cayman Islands-domiciled Trafalgar Multi Asset Fund have agreed to wind it up and to distribute its remaining assets to the trustees representing the investors to whom the assets belong, including STM Fidecs, International Investment understands.

As reported,  most of the investors in the fund were informed last year that a wind-up was likely.

The fact that the fund is now to be wound up was explained in a letter, seen by International Investment, to the fund’s investors, which was dated 13 January and signed by Richard Reinert, a director of the Nascent Fund SPC, an umbrella fund that the Trafalgar Fund is a part of.

The letter explains that the board had come to the decision to wind up the fund after “due consideration” of the findings of an investigation into “the current status of the fund’s investments” that the board had  commissioned to be carried out by an outside firm earlier this year.

Stephen Doran, of Doran + Minehane Ltd, which had carried out the investigation into the fund’s status, has been appointed voluntary liquidator, the letter said, on the basis of his having been a “special adviser to the company in respect of the fund’s investments” as well as because of his prior experience as a liquidator of similar investment vehicles.

Details on the wind-up plans, including how much individual investors are likely to receive or when, weren’t given, nor were the findings of the report that had led the board to conclude a winding-down was the best option.

Reinert didn’t immediately reply to a request for comment. However, his lawyer stressed that he had “no involvement” with STM beyond serving as a director of the umbrella platform from which the Trafalgar Multi Asset Fund operated.

Some £21m was reportedly invested in the fund, but there have been no recent estimates as to how much of this remains.

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, said the investors she represents would rather have had the fund kept going, because “after the liquidators’ fees, there won’t be anything but birdseed left” of the fund’s remaining assets.

Brooks called on STM to provide details about how the wind-up was  “likely to work; what possible/probable impact this will have on the victims’ pension funds”; and “how they [STM] intend to compensate their victims for the gross negligence which has caused this disaster”.

She said her investors also wanted answers to a number of other questions having to do with the way the Trafalgar Multi Asset Fund was marketed, and the regulated status of the advisers who promoted it.

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

STM has said that it was one of an unknown number of pension fund trustees which had QROPS and SIPP clients in the Trafalgar Multi Asset Fund, and that it has been unfairly singled out in connection with it because it is better known than the other trustees, and its association with the fund more public because unlike the others, it has made a point of keeping its investors informed about the fund’s problems.

A copy of the fund’s balance sheet dated 31 August 2015 shows the STM stake at that time accounted for around three-quarters of the fund’s value, or approximately £16.8m, with much of the remainder held by Sovereign Trustees.

Launched in 2014

Little is publicly known about the Trafalgar Multi Asset Fund, which was  managed by Victory Asset Management, run by James Hadley and Tom Biggar.

A confidential report prepared last August for the Trafalgar fund’s shareholders – a leaked copy of which was seen by International Investment in December – showed 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 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.

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 an email on 5 December to an undisclosed number of Trafalgar investors who held their Trafalgar shares in an STM Fidecs trust, STM explained that the directors of the fund had at that point announced that they had “served the fund managers notice to terminate their services”, some 11 months after the directors had informed them they were suspending it until further notice.

At that point, STM told its investors, it seemed likely that a liquidating agent “will be appointed to wind up the fund”, as is now apparently about to happen.

“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.”