Pentagon Capital Management plc
Failed - accepting claims 28 June 2012
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Pentagon Capital Management plc (Pentagon) entered administration in June 2012. FSCS is accepting claims against this firm.
Active in both the United States and the United Kingdom, Pentagon was based in the United Kingdom and operated as an independent financial advisor (IFA) and fund manager for several regulated and unregulated investment funds.
FSCS understands that Pentagon provided financial advice to its clients and, as a result of this advice, investors purchased an investment bond, arranged by Pentagon. The investment bond would provide benefits linked to certain unit-linked funds managed by Pentagon themselves.
In September 2003 an article published in the Sunday Times raised doubts about Pentagon, and the fund management activities it carried out. At around the same time the Securities & Exchange Commission (SEC) began investigating allegations of late trading against several firms in the United States.
The Financial Services Authority (FSA) also initiated an investigation into late trading in UK-authorised Collective Investment Schemes (CIS). In March 2004 the FSA concluded that there was no evidence of late trading in UK-authorised CIS. Following this announcement Pentagon wrote letters to its investors reassuring them of the soundness of Pentagon’s investment strategy and drawing investors’ attention to the conclusions reached by FSA.
In 2008 Pentagon learned that the SEC were to take legal action against them and began winding down its various funds. On 2 February 2012 the SEC’s claim that Pentagon were engaged in late trading between 1999 and 2003 was upheld. Pentagon was ordered to pay a fine of $76.8m and entered administration on 28 June 2012.
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17 Jun, 2019
FSCS has now concluded its investigations into the practices of Pentagon. Our investigations have focussed on correspondence sent by Pentagon to investors in 2003 and 2004 offering assurances to them that Pentagon were not engaged in any unlawful trading practices. FSCS has determined that protected claims may exist against Pentagon, depending on when investments were made.
Claims already submitted against Pentagon will shortly be passed to our claims processing teams for assessment.
27 May, 2019
Although FSCS is accepting claims against Pentagon, these have not yet been passed to our claims processing teams for assessment. This is because we are still carrying out investigations into the activities of Pentagon.
Firstly, we need to establish whether there are ‘protected claims’ against Pentagon. For this to happen we need to know that Pentagon owes a civil liability to customers that would enable them to sue the firm in court. Importantly, this civil liability must be in connection with a regulated activity carried out by the firm.
Currently our investigations are focussing on correspondence sent by Pentagon to investors in 2003 and 2004 offering assurances to them that Pentagon were not engaged in any unlawful trading practices. This analysis will help us reach a view on what regulatory breaches may have occurred.
We hope to have concluded our initial investigations by the end of June 2019, at which time claims will be passed to our claims processing teams for assessment.