Axiom Legal Financing Fund suspended, CEO of investment manager quits

BY: Helen Burggraf , Contributing Editor , International Adviser

The Axiom Legal Financing Fund – a specialist Cayman-domiciled fund run by Tangerine Investment Management – has suspended redemptions and announced the resignation of Tangerine’s CEO and founder Tim Schools.

The suspension was declared on 26 October in the face of significant redemption requests from investors, which followed the publication of a series of allegations about Schools and the way the fund has been managed by OffshoreAlert, a Miami-based news website.

A statement on the website of Tangerine Investment Management Ltd, which marketed the three-year-old, £117m UCIS fund, blamed the need to suspend subscriptions and redemptions last month on “adverse allegations promulgated” by OffshoreAlert. 

The Tangerine IM website statement adds that the fund’s directors have commissioned KPMG Grand Cayman to carry out “an independent review of operations”, and that Tangerine “is actively cooperating with that review”.

In announcing the suspension of redemptions last month, Ronan Guilfoyle and Graham Hampson, directors of JP SPC1, of which the Axiom LFF is a segregated portfolio, noted that even before the suspension, back in August, the Axiom LFF ‘s investment manager had been in “discussions with an FSA-regulated adviser…with a view to having it act in respect of the fund”, and that this new adviser was expected to “be engaged shortly”.

“The directors anticipate being in a position to provide information with respect to KPMG’s findings and an update on the status of the suspension to investors by the middle of November,” Guilfoyle and Hampson added.

Neither Schools, a lawyer by profession, nor other executives from Tangerine were immediately available for comment. However, in an email an executive said the managing director of Tangerine’s Singapore office, Jason Corbett, would be available to speak tomorrow.

According to Axiom Legal Financing Fund investor literature, the fund was launched in September 2009, and was promoted as “an alternative uncorrelated, open-ended investment fund that provides short-term finance to UK law firms”.

In March, Tangerine IM was named “Best credit/lending fund manager”by HedgeWeek magazine.

In addition to its office in Singapore, which opened in February, and its head office in the Cayman Islands, Tangerine IM has offices in Australia, New Zealand and the UK, according to its website.

It is not known how many investors have a stake in the fund, but David Marchant, founder of OffshoreAlert and the author of the stories about the Axiom LFF, said there were probably “hundreds”.

Litigation financing as a concept dates back hundreds of years, although it has been banned in a number of countries for almost as long because of concerns that it could distort the outcome of legal cases. Well-known investors who have been known to invest in such funds have included Invesco Perpetual’s star fund manager, Neil Woodford.

They have grown in popularity in the UK after legal aid ceased to be provided to individuals unable to finance their own legal cases.

The Axiom fund aside, litigation funds tend to be closed-ended.

For more on this story go to:

http://www.international-adviser.com/news/axiom-legal-financing-fund-suspended

Axiom Fund is ‘well managed’, says Sami Tsuyoshi [on OffshoreAlert]

November 02, 2012 by Sami Tsuyoshi

The events seem to me to have happened long ago. The fund has well managed in between times and continuation seems well to me.

The rumours about Mr Schools do not concern large sums of money and the only jeopardy to the fund will be redemptions. Keep investment safe, keep fund safe.

Sami Tsuyoshi

[email protected]

For more go to:

http://www.offshorealert.com/sami-tsuyoshi-axiom-legal-financing-fund.aspx

Legal financing fund at centre of allegations suspended

Suspended fund’s investment manager has been in discussions with an FSA regulated adviser, who “will be engaged shortly”.

By Donia O’Loughlin | Published Oct 31, 2012

The £100m Axiom Legal Financing Fund has been suspended after the director of the Cayman Islands-based investment manager’s resignation and the appointment of external auditors to review the fund’s assets following press allegations.

In a letter sent to investors from directors of the Axiom Legal Financing Fund, the directors state that the fund has suspended redemptions for participating shares designated to the fund. This is due to “a significant number of redemption requests” being received by the fund for the 1 November 2012 and 1 December 2012 redemption dates.

It follows the appointment of KPMG to conduct an audit of the fund’s assets.

The letter, seen by FTAdviser, says an update on the status of the suspension and information with respect to the KPMG’s findings will be announced by the middle of November.

The suspension follows the recent resignation of Tim Schools, a director of Cayman Islands-based investment manager Tangerine Investment Management, who stepped down shortly after a review was confirmed by the fund manager of the fund’s assets in a letter to investors.

The letter also says that the fund directors are in discussions with the investment manager with respect to a proposal that would see an FSA regulated adviser introduced into the fund’s structure in order to bring “additional support, oversight and transparency to the management of the fund’s portfolio”.

The letter states: “We understand that the investment manager has been in discussions with an FSA regulated advisor since August 2012 with a view to having it act in respect of the fund. Since the potential advisor’s due diligence on the fund is well advanced, the investment manager anticipates that, subject to the agreement of the fund to the proposed changes, the new advisor will be engaged shortly.”

Previously the fund manager wrote to investors stating that two press articles had made certain allegations against the fund and the fund manager.

Separately, Mr Schools has been under investigation by the UK Solicitors Regulation Authority in relation to alleged misconduct at ATM Solicitors, an English firm he sold last year. He faces a number of allegations including that he acted where there was a conflict of interest, failed to act with integrity, acted recklessly and failed to maintain proper books of accounts and financial records.

The SRA has referred his case to the Solicitors Disciplinary Tribunal, where it will be heard in due course. The allegations are as yet unproven and Mr Schools denies any wrongdoing.

Law firm Regulatory Legal has previously raised concerns over advisers placing clients into the fund without having seen the outcome of the KPMG review.

“We have been contacted by IFAs who were considering the fund without knowing that allegations about the fund had been made. Fortunately, the advisers can now see the KPMG conclusions before making a decision as to whether invest clients.”

Mr Schools and spokespersons for Tangerine and Axiom could not be reached for comment.

For more on this story go to:

http://www.ftadviser.com/2012/10/31/investments/offshore-funds/legal-financing-fund-at-centre-of-allegations-suspended-4GjpVoWGYvzfh2ARhPiz2J/article.html