The Law Society Gazette has over seven articles reporting Solicitors including Senior Partners struck off, fined or otherwise sanctioned for misuse of funds received by their firms or themselves personally from the Axiom Legal Financing Fund, which was a £120m fund which was created in September 2009, and had as its stated aim, providing security of capital and achieving consistent capital growth rates of 11% per annum net of all costs and charges to the fund.
The fund was to provide short term fixed interest loans to UK law firms who work on a no-win-no-fee basis with insurance said to have been set in place to cover every loan the fund makes ensuring that all loans made by the fund would be repaid even if the claim was lost at court. It was said to provide investors with a very high degree of capital security along with attractive rates of growth.
On 10 July 2014 the Serious Fraud Office opened a criminal investigation into the collapse of the Axiom Legal Financing Fund, and it has been reported that the Receivers had recovered only £12.3m of the fund when it was suspended as at 31 December 2015.
After payment of costs, only £2.6m was held for investors as of 31 December 2015.
Three Solicitors who borrowed more than £3m from the fund were struck off in July 2016 for using the money to fund their practice which was not the stated purpose of the loan.
The Senior Partner of a firm in Hull was struck off for infringements connected with borrowing more than £3m from this Cayman Islands fund following which it was alleged that he knew that his firm had not complied with the terms of the funding agreement and that the funds were wrongfully used to keep the business afloat.
Another Senior Partner from Southport was struck off the roll following allegations of misuse of funds, links with a struck off Solicitor and failure to inform professional indemnity insurers about any investigations.
The fund appears to have been very poorly managed, to say the least. It cannot realistically have been considered to be a low-risk investment.
Because the fund is an unregulated collective investment scheme, it should only have been marketed or promoted in the UK to certain classes of investor by Financial Advisors. Even then, Financial Advisors owe duties to investors to consider the suitability of investments which they recommend or introduce.
Wards Solicitors has been pursuing complaints on behalf of disappointed UK investors against certain Financial Advisors who have been found by the FOS to have mis-sold this particular investment. We welcome enquiries from disappointed UK investors with similar difficulties but are not able to help investors based overseas.
A thorough assessment of the merits of each case is always required following which our clients can make an informed decision about whether to proceed.
It is important to act fast due to strict rules limiting the time for bringing claims to six years.