SPL Guernsey, the manager of what were the Arch Cru funds, is suing the former auditor of the fund range for £3.7m for breaches of duty in relation to the fund's accounts.
Moore Stephens (Guernsey) began its audit of the fund range in 2008. The Arch Cru funds were suspended in March 2009 due to severe liquidity problems.
According to papers filed with the Royal Court of Guernsey, seen by IFAonline, the current fund managers SPL claim the financial statements of the fund's cells as at March 2008 were "materially misstated", in that they overstated the value of certain assets held by certain cells.
SPL claim Moore Stephens failed to exercise reasonable care in planning their audit of the fund by not detecting that the financial statements were overstated, in breach of its duties.
According to the court documents, Moore Stephens failed to obtain, either by mid-June 2008 or by early September 2008, any initial audit evidence relating to the valuation of the investments made by the cells.
SPL also claim Moore Stephens failed to consider whether a statement by Arch Financial Products that there was "no significant impairment" in the fund range's loan book in 2008 was misleading.
Moore Stephens was unable to provide a response to questions at the time of writing.
SPL Guersey ICC has launched claims at the English High Court against investment manager Arch Financial Products and the firm's chief executive, Robin Farrell, while summons have been issued in Guernsey against other former directors and the former administrators.
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