The Axiom Legal Financing Fund – a specialist Cayman-domiciled fund run by Tangerine Investment Management – has suspended redemptions and announced the resignation of Tangerine's CEO and founder Tim Schools.
The suspension was declared on 26 October in the face of significant redemption requests from investors, which followed the publication of a series of allegations about Schools and the way the fund has been managed by OffshoreAlert, a Miami-based news website.
A statement on the website of Tangerine Investment Management Ltd, which marketed the three-year-old, £117m UCIS fund, blamed the need to suspend subscriptions and redemptions last month on “adverse allegations promulgated" by OffshoreAlert.
The Tangerine IM website statement adds that the fund’s directors have commissioned KPMG Grand Cayman to carry out “an independent review of operations”, and that Tangerine “is actively cooperating with that review”.
In announcing the suspension of redemptions last month, Ronan Guilfoyle and Graham Hampson, directors of JP SPC1, of which the Axiom LFF is a segregated portfolio, noted that even before the suspension, back in August, the Axiom LFF 's investment manager had been in "discussions with an FSA-regulated adviser...with a view to having it act in respect of the fund", and that this new adviser was expected to "be engaged shortly".
"The directors anticipate being in a position to provide information with respect to KPMG's findings and an update on the status of the suspension to investors by the middle of November," Guilfoyle and Hampson added.
Neither Schools, a lawyer by profession, nor other executives from Tangerine were immediately available for comment. However, in an email an executive said the managing director of Tangerine's Singapore office, Jason Corbett, would be available to speak tomorrow.
'Short-term finance to UK law firms'
According to Axiom Legal Financing Fund investor literature, the fund was launched in September 2009, and was promoted as “an alternative uncorrelated, open-ended investment fund that provides short-term finance to UK law firms”.
In March, Tangerine IM was named "Best credit/lending fund manager"by HedgeWeek magazine.
In addition to its office in Singapore, which opened in February, and its head office in the Cayman Islands, Tangerine IM has offices in Australia, New Zealand and the UK, according to its website.
It is not known how many investors have a stake in the fund, but David Marchant, founder of OffshoreAlert and the author of the stories about the Axiom LFF, said there were probably "hundreds".
Litigation financing as a concept dates back hundreds of years, although it has been banned in a number of countries for almost as long because of concerns that it could distort the outcome of legal cases. Well-known investors who have been known to invest in such funds have included Invesco Perpetual’s star fund manager, Neil Woodford.
They have grown in popularity in the UK after legal aid ceased to be provided to individuals unable to finance their own legal cases.
The Axiom fund aside, litigation funds tend to be closed-ended.