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Forsyth Partners quits Dubai after losing distribution licence

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London-based investment manager and fund research firm Forsyth Partners has pulled out of Dubai after having the licence of its financial services distribution arm withdrawn by the Dubai F

London-based investment manager and fund research firm Forsyth Partners has pulled out of Dubai after having the licence of its financial services distribution arm withdrawn by the Dubai Financial Services Authority for failing to meet regulatory capital requirements.

‘The Dubai Financial Services Authority today withdrew the licence of Forsyth Partners Global Distributors Limited to carry on financial services activities in or from the Dubai International Financial Centre after it failed to meet the applicable regulatory capital requirements and was unable to demonstrate a capacity to remedy that breach,’ the Dubai regulator said in a statement on August 27. ‘Forsyth consented to the DFSA’s withdrawal of its licence.

‘The DFSA took this action following the issuance of a notice to Forsyth on August 22 requesting it to show cause why the DFSA should not withdraw its licence. The DFSA also withdrew the licence of Forsyth’s subsidiary Forsyth Partners (Middle East), which was also licensed by the DFSA to carry on financial services activities in or from the DIFC, at the request of Forsyth Middle East.

‘Both firms were Category 4 firms authorised to arrange credit or deal in investments and to advise on financial products or credit. Category 4 firms are not authorised to accept client money and therefore, withdrawal of the licence does not place DIFC client funds at risk.’

According to the DFSA rules, a Category 4 authorised firm is required to maintain an expenditure-based minimum capital level of USD10,000 or six week’s average expenditure, whichever is the higher.

Established in 1991, Forsyth Partners manages more than USD1.15bn in a range of traditional and alternative funds of funds and managed accounts and advises on around USD2bn under advisory contracts. The group, which also has offices in the UK, Zurich, Sofia, Cape Town, Seoul, Taipei and Montevideo, has served more than 600 client companies in some 55 countries.

Forsyth Partners’ range of international offshore funds covers equities, fixed interest, hedge fund, property and commodities and includes the Dublin-based Forsyth Funds umbrella structures, the Forsyth Managed Selection Series, the Forsyth Tailored Selection Series for single-manager funds, a range of funds of hedge funds and the multi-asset class Forsyth Managed Strategies series.

Forsyth established a presence in the Gulf emirate in May 2002, some two years before the establishment of the DIFC, when it acquired the Dubai-based independent financial adviser Professional Investment Consultants and rebranded the business Forsyth Private Clients International.

In July 2005 the group created Forsyth Partners Group Holdings in Dubai and a year later announced that it had relocated its global headquarters from London to Dubai to become the first asset management company to be headquartered at the DIFC. Forsyth Partners Global Distributors and Forsyth Partners (Middle East) were established in Dubai in June last year.

At the time of the headquarters move, chief executive Paul Forsyth said: ‘The DIFC is the ideal home for Forsyth Partners. As well as being in the obvious hub for financial services in the Middle East, we are confident that we can run our global business here as the regulatory regime is on a par with any in the world.’

The Dubai regulator first indicated that a problem had arisen on August 22 when it announced: ‘Following concerns arising out of the DFSA’s supervisory activities, the DFSA has directed Forsyth Partners Global Distributors to cease the carrying on of any financial service or other activity that would prejudice the clients or creditors of the firm, until further notice.

‘The firm has been given until Sunday August 26 to show cause why the firm’s licence to provide financial services in the Dubai International Financial Centre should not be withdrawn. If the firm cannot demonstrate by that date that it meets the DFSA’s regulatory requirements, including the adequacy of its capital, it is the DFSA’s intention to withdraw the firm’s licence.’

In its own statement, Forsyth acknowledged the cessation of Forsyth Partners Global Distributors’ financial services activities in Dubai after the withdrawal of its licence, as well as the withdrawal of the licence of Forsyth Partners (Middle East) at the group’s own request.

‘Forsyth Partners would like to thank the DFSA for its assistance during this restructuring process,’ the statement said. ‘Forsyth Partners has been re-examining its business model since the start of the year, which has seen it open a European distribution operation, based in London for which it has gained FSA authorisation.

‘In addition, its Dublin-domiciled Ucits III funds are being registered for sale in Italy and Finland. As part of this strategic review, further announcements about the group’s global distribution operations will be made shortly. Forsyth Partners’ UK-based investment management, research and client service operations are unaffected by the revised arrangements in Dubai.’

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