The
directors of Cayman based Axiom Legal Financing Fund, the embattled fund at the
centre of a storm of serious fraud allegations, are reported to have sacked the
current investment managers, Tangerine Investment Management.
Last
month all redemptions in the fund were suspended following a flood of
redemption requests in the wake of allegations made by OffshoreAlert about
Tangerine’s boss, Tim Schools, and management of the fund. The
seriousness of the allegations made by OffshoreAlert has escalated over the
past couple of months, and now includes claims that the fund appears to be a
Ponzi scheme and that investors have been defrauded.
Mr Schools, Tangerine and the Fund
have all strenuously denied any wrongdoing, and Mr Schools has indicated that
he will be taking defamation proceedings against OffshoreAlert. Despite this, Mr Schools stepped down as head
of Tangerine following publication of the allegations. He is
separately under investigation by the Solicitors Regulation Authority in
England in relation to alleged misconduct at ATM Solicitors, an English solicitors
firm he sold last year. His case has
been referred to the Solicitors Disciplinary Tribunal, where it will be heard
in due course. The allegations are as yet unproven and again Mr Schools
strongly denies any wrongdoing.
KPMG Cayman was appointed by
Axiom to carry out an independent review of operations and it was said that
Tangerine was “actively cooperating with that review”. The output of that review was expected by
today at the latest, but whilst it is understood that the directors have seen a
draft of the report, the final version will be delayed as KPMG have now been
asked to provide interim advisory services in the light of Tangerine’s removal
and need to focus on this as their priority.
KPMG’s role will be to preserve the fund’s assets, to interact with a
panel of law firms to determine their short-term funding requirements for the
progression of cases and to gather proposals for the ongoing management of the
fund. The delay of the publication of
the report will doubtless be a disappointment to the many investors in the £100
million fund, who are desperate to know whether there investment is safe and
whether there is any truth in the allegations.
In a letter dated 14
November, the directors said that an Extraordinary General Meeting will be held
in December at which the directors, will present proposals regarding the
continued management of the fund.
There is no explanation in the letter as to why
Tangerine’s appointment has been terminated. It is therefore not clear whether the action
is because KPMG have found prima facie evidence of wrongdoing, or simply that the
step was necessary to restore credibility in the fund’s management in light of
the allegations.
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