Speaking to Isle of Man Today, Bourbon, a former senior official at the Isle of Man financial services regulator, said that despite 3,247 investors facing losses of almost £292m ($372m, €332m), a greater number of people have made a profit from New Earth, which invested in recycling plants in the UK.
New Earth Recycling and Renewables (NERR) group of funds were wound up by the Isle of Man authorities last July, while another Premier Group investment Eco Resources Fund, was ordered to be shut in March this year.
A total of 189 investors lost up to £61m from the Eco Resources Fund, which invested in bamboo plantations in Nicaragua, with tax payers on the Isle of Man picking up the bill for the collapse of both funds.
Large commissions
Bourbon’s comments come despite allegations by the Premier Shareholder’s Group, a campaign group for investors, many of whom claim to have lost their life savings, that Premier Group (Isle of Man) paid large commissions to “unqualified and unlicensed” agents to target pensioners by marketing their funds as low risk.
The group also claims investors were locked in with “punitive” exit fees, often as high as 30%, which they were not told about when they signed up.
However, Bourbon denied the accusations, adding: “It is highly unlikely that anybody could have a significant investment in Premier Group without understanding the risk.”
Boubon insisted all fees and charges were clearly set out in the offer document that investors were required to sign to confirm their status as an experienced investor.
He added that it was financial advisers’ “responsibility to check whether investments were suitable for their clients”, adding that a number of Premier group funds were sold by unregulated IFAs in Spain where claims against them have been upheld.
Regulator’s failure
The Premier Shareholder’s Group also accused Isle of Man authorities, including the Financial Service Authority (FSA) of failing to protect investors, claiming the regulator had received complaints about the Premier Group funds as early as 2002.
The group added that despite concerns raised with the authorities, the regulator still went ahead and granted a new licence to the fund manager in 2007.
Last month, Isle of Man treasury minister Alfred Cannan has confirmed that the island’s Financial Services Authority (IOMFSA) is “undertaking a review” of unregulated funds and will “make appropriate recommendations for change”.
The Isle of Man Financial Services Authority said it is now investigating historic allegations against Premier Group (Isle of Man)
“The FSA can confirm the allegations and events surrounding PGIOM and its group of companies are actively under review by the FSA,” the watchdog told IoM Today.
‘Witch hunt’
Bourbon slammed the regulatory action as ’something of a witch hunt’.
“There is a popular view in the market that certain negative elements of the Moneyval report have placed pressure on the financial services regulator because they do not have examples that they can give of successful prosecutions when compared with jurisdictions that have strong Mafia and/or other criminal activity.
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