The Financial Services Authority (FSA) has removed the permissions of SIPP provider HD Administrators (HDA) with immediate effect after two directors were arrested.
An investigation was brought about after investors claimed the firm had defrauded them of £20m through the promotion of unregulated collective investment schemes (UCIS) through a SIPP.
Earlier in March, property firm Arck LLP, with which HDA shares directors, went into liquidation.
Arck promoted property investments in Cape Verde and Canada, and advertised investment in these locations through HD's SIPP scheme, which has 422 members.
Katheryn Clark, director of Arck, is also an administrator at HDA and a trustee of the scheme, but did not declare this to the FSA, the regulator said.
Clark was arrested on 2 March in Nottinghamshire on suspicion of fraud by false representation and money laundering in relation to Arck, the FSA said.
A police search of Clark's house revealed she has received, circulated or been involved in the provision of forged bank statements relating to Arck's accounts to Arck investors.
"Clark, on behalf of HDA, failed adequately and regularly to calculate the value of assets held within the HD personal pension scheme," the FSA said.
"This may have resulted in significant overpayments being made to customers with the consequence that such customers may incur subsequent unauthorised payment or tax charges when taking their pension benefits in breach of tax and/or pension legislation."
According to the FSA's investigation, the bank statement circulated by Clark valued the pension fund at £13,750,000, when in fact the balance was £25.90.
Clark has received £360,000 from Arck since 2006.
Richard Clay, another managing member of Arck and a director of HDA, was also arrested on 2 March.
Michelle King, another approved person at HDA, was not arrested.
However the FSA said King told the regulator she did not know she had been approved to perform a controlled function at the company.
"[King] could not adequately explain how a small SIPP operated and did not understand her regulatory responsibilites. She said she acted purely as an administrator," the FSA said.
The regulatory action comes after investors in Arck, some of whom invested through an HDA SIPP, brought civil action against the firms.
They alleged that Arck misappropriated their funds and then misrepresented the health of the firm through forged bank statements.
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