UBS and Aberdeen Asset Management were instructed by London's Supreme Court yesterday to hand over sensitive documents to a property investment firm controlled by Dublin-based Treasury Holdings as part of a lengthy legal battle due to be heard within weeks, writes John Mulligan.
The action, being taken by Real Estate Opportunities (REO) against UBS and Aberdeen, stems from REO's 2001 flotation and subsequent investments made on its behalf. REO subsequently suffered heavy losses in its income fund.
Both investment banks had appealed a previous High Court ruling instructing them to hand over transcripts and recordings of interviews of their employees conducted by the UK's Financial Services Authority (FSA), and other information, in relation to its investigation of the collapse of split capital investment trusts.
REO, backed by Treasury Holdings' Richard Barrett and Johnny Ronan, utilises such a structure, where its shares are split into different classes, with various rights, risks and potential returns attached to each class.
The FSA's investigation into split capital trusts, formally initiated in 2002, ended in 2005. Some of the companies investigated, including UBS and Aberdeen Asset Management, agreed to a settlement in the form of contributing to a £194 million (€286 million) fund to compensate investors. Neither admitted liability.
REO then took legal action against Aberdeen, which had advised it on the flotation and managed its fund, and against UBS, which had assisted. REO is seeking up to €120 million in damages, alleging that the share structure established by Aberdeen and UBS was excessively complex and overly risky. Both banks have rejected REO's claims.
They had declined to hand over recordings of interviews of their current and former employees undertaken by FSA during the course of its investigation, arguing that to do so would breach a section of the Financial Services and Markets Act (FSMA) that prohibits the disclosure of confidential information received by the FSA. It claimed that disclosing some of the confidential information could have left it open to prosecution.
Transcripts of the recordings could be instrumental to REO in its attempt to win its legal action.
Yesterday, the Supreme Court rejected claims that disclosing the transcripts would breach confidentiality. One judge said UBS was "concerned to resist inspection of material containing information about itself" and it would be "extremely unlikely that there was even the remotest possibility that it might be prosecuted for disclosing such information".
