Tuesday, November 04, 2008

BVI FSC Publishes Public Statement Suspending Activities of the BVI-registered Fund

The British Virgin Islands Financial Services Commission issued a public statement pursuant to the Financial Services Commission Act, 2001, concerning Reserve International Liquidity Fund Ltd. The purpose of this public announcement by the BVI FSC is to protect the interests of the customers, creditors or investors of this BVI Offshore Fund, registered in 1999 under the BVI Mutual Funds Act, 1996.

In October 2008, the Commission received complaints from investors who alleged that the Fund has improperly valued its bond holdings in an institution which had filed for bankruptcy. The complaint specifically alleges that the Fund failed to appropriately mark down the value of these bonds, and further allowed certain investors to redeem their investments at par value, before taking action to write down the value of the bonds which made the Fund's remaining investors to absorb the loss associated with these bonds.

Investigations into the Fund's activities were commenced on 10 October, when the Financial Services Commission asked for detailed information and records from the Fund to establish the relevance of allegations against it. While investigations into the Fund are continuing, the Commission issued a directive to the BVI Fund, requiring it, until further notice, to suspend the shares subscription and their redemption to investors, as well as submit monthly reports to the Commission that would include the details of its cash balance and investments, and an update on all ongoing litigation where the Fund is involved.

In the course of investigation of Reserve International Liquidity Fund Ltd, the FSC will provide an update.

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