FSA offering deal over trust row

A FRAGILE coalition of firms embroiled in the split capital trust scandal is breaking up as some fund managers seek to have fines reduced through 'plea bargaining'.

At a meeting of bosses from 21 of the accused firms, the Financial Services Authority offered them the chance to sign up to a compensation package that could run to £2bn in return for lower fines.

The meeting followed the FSA's largest-ever investigation in search of evidence of collusion among a 'magic circle' of fund managers who tried to prop up the share prices of their split-capital trusts as stock markets collapsed.

At least 21 split trusts from ten firms collapsed. It is thought those most anxious to settle have a low exposure to the scandal, such as Morley Fund Management, ISIS, HSBC and UBS.

Sources say the firm the FSA would most like to sign up to the compensation package is Aberdeen Asset Management, considered to be at the heart of the magic circle.

Testimony from Aberdeen could implicate other players.