LFP 1 SICAV has filed a civil claim against the CSSF for gross negligence. The directors of the fund claim the regulator turned a blind eye to blatant fraud with the fund between 2014 and 2019, and can therefore be held responsible for the losses in the fund.
According to the claim, the CSSF ‘has not been acting as a proper regulator’ between 2014 and 2019, when the fund’s then-directors and advisors Levi Dewaegenaere and Hans Noomen were in fact running a Ponzi scheme, compensating investment losses and secret sales of the fund’s assets with newly raised money and by falsifying the fund’s accounts. Total losses over the period now amount to more than €99 million, according to the claim.
‘By not doing their job and turning a blind eye to all the problems with the fund, they are liable for all the damages,’ David Mapley (pictured), one of the fund’s directors, told Investment Officer. Mapley has been suspended from his directorship since June for providing ‘incomplete and incorrect information’ to the CSSF upon his application to be the fund’s director, an allegation that Mapley himself disputes. https://www.investmentofficer.lu/en/news/cssf-suspends-critical-fund-director According to Mapley, he is still allowed to attend board meetings and communicate with the fund’s investors despite his suspension.
Mapley and his fellow directors are currently also suing the fund’s former directors Dewaegenaere and Noomen to recoup the lost money, but believe this will amount to little as ‘most of the money is gone’, says Mapley, who has therefore now turned to the CSSF as a last resort.
Publicity stunt
According to Mapley, the regulator can in theory be held responsible for investment losses. There are, however, no precedents of the CSSF having been ordered to compensate investors in this way. In response to questions from Investment Officer, the CSSF said the claim has no merit. ‘This summons is obviously inadmissible in form, outlandish in substance and merely a publicity stunt’, said Maître Albert Rodesch, who is representing the CSSF in the case.