FSCS concludes investigations into practices of Pentagon Capital Management

Maria Nikolova

The compensation scheme has determined that protected claims may exist against Pentagon, depending on when investments were made.

The UK Financial Services Compensation Scheme (FSCS) has published an update into the matter concerning failed fund manager Pentagon Capital Management plc.

FSCS says it has now concluded its investigations into the practices of Pentagon. The investigations have focussed on correspondence sent by Pentagon to investors in 2003 and 2004 offering assurances to them that Pentagon were not engaged in any unlawful trading practices. FSCS has determined that protected claims may exist against Pentagon, depending on when investments were made.

Claims already submitted against Pentagon will shortly be passed to FSCS’s claims processing teams for assessment.

Pentagon, which was active in the UK and the US, entered administration in June 2012. Pentagon was based in the United Kingdom and operated as an independent financial advisor (IFA) and fund manager for several regulated and unregulated investment funds.

The entity provided financial advice to its clients and, as a result of this advice, investors purchased an investment bond, arranged by Pentagon. The investment bond would provide benefits linked to certain unit-linked funds managed by Pentagon themselves.

In the fall of 2003, the United States Securities & Exchange Commission (SEC) started investigating allegations of late trading against several firms in the United States.

The Financial Services Authority (FSA), the predecessor of the FCA, also initiated an investigation into late trading in UK-authorised Collective Investment Schemes (CIS). In March 2004, the FSA concluded that there was no evidence of late trading in UK-authorised CIS. Following this announcement Pentagon sent letters to its investors reassuring them of the soundness of Pentagon’s investment strategy and drawing investors’ attention to the conclusions reached by FSA.

In 2008, Pentagon learned that the SEC were to take legal action against them and commenced winding down its various funds. On February 2, 2012 the SEC’s claim that Pentagon were engaged in late trading between 1999 and 2003 was upheld. Pentagon was ordered to pay a fine of $76.8 million. The entity then entered administration on June 28, 2012.

Read this next

Digital Assets

DappRadar report: NFTs volume below $1 billion for the first time since June 2021

DappRadar’s July 2022 industry report found that blockchain games and their NFTs remain resilient amid a crypto winter accentuated by the debacle of Terra.

Digital Assets

Blockchain.com registers to operate crypto business in Italy

Blockchain.com had registered as a digital asset provider in Italy, following in the tracks of rivals who joined a special registry with brokerage regulator Organismo degli Agenti e dei Mediatori (OAM).

Digital Assets

Binance rolls out crypto card in Argentina with 8% cashback

Binance is launching its crypto debit card in Argentina, the first country in Latin America to have the product thanks to a partnership with Mastercard.

Digital Assets

Greece sends BTC-e operator Alexander Vinnik to US

Alexander Vinnik, an alleged Russian hacker accused of laundering $4 billion of criminal proceeds through BTC-e, has been extradited from Greece to the United States.

Retail FX

Saxo Bank reports weakest FX volume in 6 months

As many traders were away on annual summer leave, currency markets saw a relatively quiet period in July. Within that context, Copenhagen-based Saxo Bank has reported its monthly metrics, which showed a renewed decline month-over-month.

Market News

The Week Ahead: 5 August from David Madden, Market Analyst at Equiti Group

It has been an interesting week and despite a lot of negative news, equity markets enjoyed a positive run. US House Speaker, Nancy Pelosi, defied the warnings from the Chinese government and carried out a visit to Taiwan. The Beijing authorities moved military hardware close to the self-governed island to flex its muscles. Stock markets came under a little pressure as a result and risk-off assets like the Japanese yen and gold found themselves in high demand.

Opinion

Alina Strogonova of Muvon Payments: How Can Fintech Optimise Payments

Financial services in their conventional form are obsolete, according to fintech startups. New-age finance is constantly redesigning electronic money transactions and testing innovative solutions.

Digital Assets

No need for CFDs: BitMEX introduces leveraged FX perpetual swaps

Previously retail FX trading was mostly possible via CFDs (contract for difference). BitMEX’s FX perps allow both retail users and institutional traders to access FX markets through an exchange-traded contract.

Digital Assets

BEQUANT launches index measuring dollar against crypto

“Our research team has worked hard to quantify and capture the latest economic story into the broader crypto market.”

<