Arck advice could lead to a flood of claims
There have been some recent developments in the on-going saga involving Arck LLP, Yorkshire bank and around 400 disgruntled investors.
It is well known by now that Yorkshire Bank has set up a scheme offering 'financial support' to investors who lost money by investing with Arck LLP. Arck promoted a series of unregulated investments in the form of sale and repurchase contracts involving land. Arck would purchase land with 'development potential' and investors would invest a sum of money for a fixed term, with full repayment of capital plus interest to be made on a set date in the future.
Arck LLP represented that Yorkshire Bank would hold investors' money in a segregated client account with the intention that this money would never leave the UK, a statement which now appears to have been untrue.
Around 400 investors have since brought claims against Yorkshire Bank (worth a total of roughly £23 million) and we understand that many of these investors will qualify for redress under the 'financial support' scheme.
It now appears that Yorkshire Bank is intending to bring claims against the IFAs who sold the Arck products. It seems likely that a large number of IFAs will be receiving notices from Yorkshire Bank stating that they intend to seek an indemnity in respect of any sums paid out in compensation under the support scheme.
There are some interesting questions in respect of any contribution claim that Yorkshire Bank may bring. The letters we have seen do not indicate how Yorkshire Bank will seek to advance any potential claim against the advisors. It also appears to us that there might be significant issues in demonstrating that Yorkshire Bank and the advising firms are actually liable to the investors in respect of the same damage, meaning the Bank could not succeed with a contribution claim.
Nevertheless, it certainly appears as if there could be a flood of activity resulting from the sinking of Arck (LLP).