The chairman of the suspended EEA Life Settlements fund has written to investors after its auditors said the fund is worth $100m less than the value stated in the company's annual update.
The fund was suspended on 30 November 2011 due to "unprecedented" levels of redemption requests after the regulator announced that it would seek to ban the sale and marketing of traded life policy investments to retail investors - which it did this year.
Investors have since been unable to sell their holdings, and have effectively been left trapped in the vehicle.
Earlier this week the news got worse for investors, with auditors Ernst & Young claiming the portfolio has been overvalued by around $100m, but in a letter to shareholders, chairman of the EEA fund Mark Colton hit back at its claims.
He said the auditor's numbers were compared to the board's figures but said "none of these matched the board's valuation".
Colton added because the policies had become highly illiquid, valuing the fund had become "considerably more difficult than in previous years", leading to a "trying time" for investors and advisers.
He also pointed the finger at the regulator, noting that its labelling of the products as "toxic" caused a rush of redemptions.
Other factors, including an increased mortality rate in the fund, also played a role.
EEA and Ernst & Young have arrived at very different assessments of the value of the portfolio, which EEA claims is worth $871m.
Colton also sought to reassure investors, adding: "The policies purchased for shareholders are safe.
"The premiums have been paid and there is a substantial reserve for the payment of future premiums."
EEA will be commissioning a mortality review of the entire portfolio, he added.
More than £167,000 raised
Beware ‘temporary’ vulnerability
Celtic WM and Active Wealth