The Court of Appeal has reserved judgment in Aberdeen Asset Management (AAM) and UBS Warburg’s appeal against a High Court disclosure order.
AAM and UBS are appealing David Richards J’s order that they must permit Real Estate Opportunities (REO), a property investment fund controlled by Irish investor Treasury Holdings, to inspect redacted transcripts of confidential employee interviews with the FSA.
They claim that they are entitled to withhold the documents on the grounds that to disclose the contents of the interviews could open them to criminal sanctions under s 348 of the Financial Services and Markets Act 2000.
REO’s QC Jonathan Sumption told the court that Richards J had made “an extremely clear and careful judgment, in which each of the points advanced by the appellants has been considered and rejected.”
“The appellants have nothing new to say and no real answer to the judge’s reasoning. Their challenge to the exercise of his discretion (on the footing that disclosure is not prohibited by s 348) is particularly unmeritorious,” he said.
REO made the disclosure application in its £80m claim against its former fund manager AAM and broker UBS.
In 2001, REO was formed as a split-capital investment trust with its assets held in income and property portfolios the financial model for the REO and its flotation was developed and produced by Aberdeen and UBS, with UBS brokering the flotation.
Post-flotation, Aberdeen agreed to manage REO’s investments which it did by making investments in securities issued by other split capital investment companies and trusts.
£165m was subsequently wiped off REO’s income portfolio.
In the ensuing scandal that engulfed Aberdeen and other fund managers the FSA
investigated and interviewed Aberdeen and UBS employees.
REO believes that the transcripts are bound to cover Aberdeen and UBS’s knowledge of the risks associated with splits and will prove that a different flotation model should have been used and the investments were not in REO’s best interests.
The splits fiasco cost Aberdeen £78m in compensation payments. That included £35m as part of a £194m settlement deal between fund managers and the FSA and a further £39m payable to disgruntled investors.
