Eight on hit list over split scandal

ALL charges against the 21 firms involved in the splitcapital investment trust scandal could be dropped if eight individuals accept liability and agree to leave the City for good.

The highly unusual deal by the Financial Services Authority comes as the firms appear likely to increase an ex-gratia payment from £120m to as much as £230m to compensate investors who lost funds.

The FSA recently made its proposal to the firms and named the individuals it wants to censure. It is understood that the hitlist is headed by Chris Fishwick, former investment manager at Aberdeen Asset Management, who left the City in October 2002.

One City banker said: 'Fishwick is certainly the one they care most about.'

Fishwick, who was paid £2.2m in 2002, is now believed to work in property development and has no plans to return to the financial sector.

The FSA's offer is surprising because chief executive John Tiner recently told the influential Treasury Select Committee that it was investigating the role of 30 individuals in the split-capital trust scandal. The list includes one employee each from Brewin Dolphin, BFS, Collins Stewart, Jupiter Asset Management, Legg Mason, Exeter Fund Management as well as Fishwick and one of his former colleagues.

It is believed that four or five individuals are seriously considering the proposal, though the FSA's terms would have to be amended before they finally agree.

One banker said: 'The FSA wants eight heads on a plate, but the individuals cannot, and will not, admit guilt as doing so would only open the floodgates to litigation. But I think we will reach some sort of agreement on this issue.'

The 21 firms are keen to draw a line under the damaging splits saga, which saw thousands of investors lose a total of more than £600m.

They initially offered £120m as an ex-gratia payment, but the FSA rejected the sum and instead demanded £350m - a figure it described as 'pragmatic'.

John Duffield, chief executive of New Star Asset Management, leads for the 21 firms in the negotiations with the FSA, and it is understood that they have now reached the midway point.

One insider said: 'I think we are now looking at a figure half-way between the two points, probably at about £230m or thereabouts.'