Arch Financial Products chief executive Robin Farrell and compliance director Robert Addison have fiercely contested allegations of greed and dishonesty in relation to investments made by the Arch Cru funds.
Defending themselves in the case brought by SPL Private Finance, they told the High Court this morning that there was no "contemporaneous evidence" that would suggest that Arch "failed to properly discharge its duties as investment manager" or that Farrell "personally procured Arch to breach contractual duties".
The pair said: "The nature of the allegation is disgraceful especially as it was made with no circumstantial evidence. There was nothing deceitful in our actions. [There is] no evidence, only inferences."
They challenged previous arguments, heard last week, which suggested Arch had made £3m in ‘secret profits' from its investment in student accommodation group Club Easy, and said there was no evidence of greed and dishonesty.
They told the court: "We actually rebated fees to our investors of just under £3m [between 2007 and 2008]. This is hardly evidence of a greedy and dishonest fund manager, quite the opposite. Arch was doing very well to earn fees and was generously giving back to investors. There was no concealment whatsoever."
They explained that the investment had to be "signed off by at least seven to eight people" who were "aware of the transaction".
The fees had been pre-agreed and were received in relation to Arch's combined role as investment manager and corporate adviser on the deal, which was permitted by the cells' investment management agreements, they said.
Payments were made through "respected law firm" Cobbetts which was "very familiar" with the investments. The investments were "clearly marked as Club Easy", they added.
Farrell and Addison said in their defence against the Arch claim that there was "no breach of fiduciary duty", the fee to Arch from its investment in Lonscale/Club Easy was "pre-agreed prior to any investment by the cells being contemplated and they were disclosed to SPL", and that the investment was considered a "good investment".
Farrell defended the claim against himself by saying "there is no evidence of personal gain or dishonesty".
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