FSCS aims to conclude initial investigations into Arjent by end-August 2019

The UK Financial Services Compensation Scheme (FSCS) has provided an update regarding Arjent Limited, a firm which the body declared in default back in April 2017.

Although FSCS is accepting claims against Arjent, claims which are linked to the fraud carried out by firm’s CEO and chairman Robert P. DePalo have not yet been passed to the FSCS’s claims processing teams for assessment.

For these claims, firstly, the compensation scheme needs to establish whether there are ‘protected claims’ against Arjent. For this to happen, the FSCS needs to know that Arjent owes a civil liability to customers that would enable them to sue the firm in court. Importantly, this civil liability must be in connection with a regulated activity carried out by the firm.

Currently the FSCS’s investigations are focusing on the extent of the fraud carried out, specifically in relation to certain debentures that were issued by Arjent. In addition, the body is investigating what impact the fraud may have had in causing losses to be suffered by customers. This analysis is set to help the FSCS reach a view on what regulatory breaches may have occurred.

The scheme hopes to have concluded its initial investigations by the end of August 2019, at which time claims will be passed to the FSCS’s claims processing teams for assessment.

Arjent Limited entered administration in February 2016, and in February 2017 the firm was placed into liquidation. Arjent Limited was declared in default by FSCS on April 27, 2017.

Arjent was a London based wealth management company that offered specialist stockbroking and investment management services to its clients. Arjent specialised in building bespoke investment strategies for its clients, which include both professional and retail investors. Arjent was also affiliated with a U.S. based firm, Arjent LLC.

The United States Securities and Exchange Commission (SEC) launched an investigation into Arjent and Arjent LLC in relation to alleged fraud carried out by DePalo. In May 2015 the SEC brought charges against DePalo alleging that he committed fraud by selling shares in a company called Pangaea Trading Partners and then misrepresenting to investors the value of Pangaea’s assets and how investors’ funds would be used.

The SEC alleged that Mr DePalo transferred $2.3 million of investor funds directly to his own bank accounts. In July 2018 Mr DePalo was convicted on a number of counts of grand larceny, money laundering and fraud.