Towry Law International (Asia) Hong Kong Ltd has agreed to make ex-gratia payments to all its investors remaining in the two troubled funds - Global Diversified Trading Ltd (GDT) and Global Opportunities Trading Ltd (GOT) - according to a statement that appeared on the website of the Securities Futures Commission (SFC) of Hong Kong.
The investors in these funds from different parts of the world, including the UAE, have been mounting pressure on Towry Law International (TLI) for compensation for the losses suffered in these funds.
While GOT investors will receive an amount equal to 90 per cent of the capital invested, plus compound interest at one per cent over the HSBC US dollar deposit rate prevailing from the date of investment to the date the offer is accepted, GDT investors who invested through TLI will receive an amount equal to 80 per cent of the capital invested, plus compound interest at the same rate from the date of investment to the date the offer is accepted.
SFC of Hong Kong had instituted disciplinary proceedings against Towry Law (Asia) HK Limited (Towry Law International - TLI) as a result of its failure in relation to two hedge funds managed by third parties - GDT and GOT.
The SFC alleged that TLI conducted insufficient due diligence into the two funds before recommending them to clients; sold the two funds to clients whose investment objectives and risk tolerance did not always match with the risk profiles of the two funds; failed to conduct proper enquiries into circumstances surrounding the two funds that indicated problems with the funds; and failed to advise clients when it became clear the funds had problems.
GDT and GOT were both suspended from trading in September, 2002, and are now being liquidated. The primary responsibility for the collapse of the two funds lies with other parties, not TLI.
Without any admission of liability, TLI has agreed to make ex-gratia payments to all TLI investors.
The reason for the difference between the levels of the ex-gratia payments offered for GOT and GDT investors is that these funds were launched at different times and in different circumstances.
There is a mechanism for the processing of investor applications for the ex-gratia payments, with SFC supervising matters in Hong Kong (the TLI schemes).
The TLI investors remaining in the funds as at the suspension dates will receive a letter from TLI by the end of this month setting out the terms of the schemes.
Investors are advised to consider their position and to take legal advice in relation to the TLI schemes. TLI has confirmed that its Hong Kong office will remain open until completion of the schemes.
"The SFC recognises the high level of cooperation it has received from the current management of TLI as well as the promised cooperation during the life of the schemes," said Alan Linning, SFC's executive director of enforcement.
"Taking all the circumstances into account, the SFC considers that this settlement is in the public interest."
Towry Law offers ex-gratia to investors in troubled funds
Towry Law International (Asia) Hong Kong Ltd has agreed to make ex-gratia payments to all its investors remaining in the two troubled funds - Global Diversified Trading Ltd (GDT) and Global Opportunities Trading Ltd (GOT) - according to a statement that appeared on the website of the Securities Futures Commission (SFC) of Hong Kong.