Investors in the failed Arch Cru funds have called for SPL Private Finance to drop its lawsuit against Arch Financial Products and its chief executive Robin Farrell, saying it would "only damage what remains of their investments if unsuccessful".
The group, which is filing its own case against authorised corporate director Capita Financial Managers, after the High Court granted a group litigation order last month, said the SPL claim diverted attention from "the true culprit", Capita.
SPL is currently managing the Guernsey cells that make up the Arch Cru funds. It is suing former fund manager Arch for £150m for gross negligence in its role as investment manager of the failed funds between 2007 and 2008.
The case, which also brought claims against Arch FP's chief executive Robin Farrell alleging that he dishonestly assisted Arch FP in breaches of fiduciary duty in relation to its investment in student accommodation group Club Easy, was postponed on Tuesday to continue in January.
But John Hawkes, chairman of the Arch Cru Litigation Committee (ACLC), the 800-strong investor group bringing the claim against Capita, said the action is pointless and he would not be surprised "if it is withdrawn altogether once the deadline for accepting Capita's own offer to investors has passed on 31 December".
He said: "It is untenable to bring an action for £150m against a company with assets of £49,000 and no professional indemnity insurance. The real target should be Capita which had overall responsibility and the means to pay compensation."
Capita has set up a £54m payment scheme with Arch Cru depositories BNY Mellon and HSBC to compensate investors in the Arch Cru funds.
But the ACLC condemned the £54m scheme as "derisory", saying it offered investors only 15% of the value of their investment, plus whatever further distributions may be made from the fund as it is wound down.
Hawkes said: "Investors were suckered into this nightmare and now their remaining investment is being spent on an unsustainable action against those who ruined them and is at risk of adverse costs if the case is lost. We hope SPL will reflect on the situation and desist in its claim."
Hawkes said: "We urge all Arch investors to join our group and reject the compensation offer that Capita FM has made."
Capita declined to comment.
The regulator has also drawn up a consumer redress scheme (CRS) for investors in Arch Cru funds, requiring advisers to contact their clients to see whether they want to opt in.
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