Investment firm facing JFSC action win right for independent audit

Friday 29 January 2016

An investment firm accused of losing thousands of pounds worth of clients’ money through poor advice has won the right to seek a second independent assessment of their actions.

SWM Synergy are facing action by the finance regulator – which could lead to them being forced to stop trading – over advice that they gave to clients who lost thousands of pounds in the 2008 crash. The company argues that the advice it gave at that time was sound, and they couldn't have predicted the global financial meltdown.

The action concerns 42 clients who made investments with SWM between 2005 and 2010.

The Jersey Financial Services Commission (JFSC) has already received an independent assessment by Grant Thornton, which blamed the investment managers for giving unsuitable advice.

But SWM argued that Grant Thornton were not qualified to give a view, and wanted to commission a second independent review – but had to go to the Royal Court for permission, because sanctions that the JFSC had already imposed meant that they were not allowed to incur expenses that were “outside the ordinary course of business."

The court case focussed on whether a second review would qualify as being within the “ordinary course of business” – the JFSC opposed what SWM wanted to do, but the Royal Court backed the firm, not the regulator.

The firm has welcomed the decision – in a statement the directors described it as a “crucial milestone” in a matter that they say could affect the livelihoods of everyone working at the company.

They said: “At its core, this dispute has been over whether we were allowed to commission independent experts to review the advice we provided to a specific group of clients on their investments prior to the global financial crash in 2008, and the procedures we followed in giving that advice, at that time. 

“In common with many investments around the world through the time of that financial crash and its repercussions, some of those investments lost money - but we have always maintained the advice given at the time was sound, suitable, and professionally delivered. In fact, the vast majority of the investors involved remain clients of ours to this day.”