The Jersey Financial Services Commission is bringing the action against Alternate Insurance Services Ltd and its directors Douglas Clark and Robert Le Fustec and employee John Cronin, who deny the allegations.
The commission’s action began last year by way of an Order of Justice, following a number of complaints about Traded Endowment Investment Portfolio Plans (TIPPS) which had been recommended by Alternate.
Typically this type of investment involves the purchase of a portfolio of traded endowment policies funded partly with capital provided by the customer and partly by a loan in the customer’s name.
Low risk The investors cited in the Order of Justice were all Island residents and relatively inexperienced investors.
They say they were told that TIPP investments were low-risk.
But the commission says this was misleading and failed to take into account that the value of the underlying endowment policies was subject to stock market fluctuation.
The commission alleges that Alternate is ‘not fit and proper’ to provide financial services business and is asking the court to order the directors to compensate the investors for the losses they have suffered.
In the answer filed by the company, the investment firm denies the allegations and claims that the losses were caused by ‘unforeseeable and unprecedented market conditions’ for which they cannot be held liable.
The trial has been set down for four weeks during which time 23 of the investors will give evidence.
