Court battle for lost pension savings: Swedish trader ‘pulled the strings’

Legal representatives from the Swedish pensions authority this week told a Maltese court that some €79 million in savings had been lost by the Maltese fund Falcon Funds.

Michael Westberg was testifying in court in the case filed by Falcon Funds against investment managers Temple Asset Management. The latter has since had its licence revoked by the Malta Financial Services Regulator, while Falcon was placed under control of auditors KPMG.

Westberg said that pensioners’ savings in the Malta-run Falcon Funds had been lost through suspicious investments carried out by Temple to the mysterious Swedish trader Emil Ingmanson, who in the first place had promoted Falcon Funds for its inclusion in the Swedish pension platform.

Falcon Funds collected pensioners’ savings, but all investment decisions were taken by Temple. Falcon was one of several pension plans available to Swedish savers.

Westberg said there were at least three similar instruments designed to benefit Ingmanson, who was recently arrested in Sweden, and that these investment decisions were taken by Temple.

“We discovered that large amounts of the fund’s money were invested in so-called ETIs (Exchange Traded Instruments). These instruments had been tailor-made by Temple for Falcon Funds. We arrived at conclusion that they had not been designed for the purposes of being a suitable investment, rather to conceal the real underlying investment, that is the real address of the invested money.

“This led us to suspect that FF could very well have been the subject of fraud,” Westberg said.

Westberg added that KPMG Malta had since confirmed their suspicions that the ETIs were issued by special purpose companies that had “virtually no restriction as to what they could do with the money invested.”

The consequence was that Falcon suffered substantial damages, and after terminating the fund on the Swedish platform it had returned approximately €160 million but final losses to savers amounted to some €79 million.

The MFSA also fined Temple over €600,000 for its investment breaches, and issued reprimands to Falcon’s directors: former finance minister Tonio Fenech, Ian Zammit, and Joseph Zammit.

“Temple was not being as transparent as they should have been with us, especially on the involvement of Mr Ingmanson in its operation. He was not directly involved but was influencing its operations,” the MFSA’s director of securities and markets Christopher Buttigieg told the court.

Ingmanson was planning to set up his own investment management company, Falcon Asset Management, with an office in the same building as Temple, ostensibly to take over the investment decision-making for Falcon Funds.

“Temple director Anthony Farrell had said that Ingmanson was not involved in decisions, but in a conference call in October 2016 Farrell told the MFSA that Ingmanson was ‘behind everything’.”

Buttigieg said that although Ingmanson had no official post in Temple, he had applied with MFSA to be founder-shareholder of Falcon Asset Management. He later withdrew the applications. “Ingmanson was not authorised for investment management,” Buttigieg said.

Ingmanson was later revealed by an investigation carried out by the SPA that he was involved in other pension funds, and that he had orchestrated a merger of client records from one fund to the newly set-up Falcon Fund, allowing the Maltese pension fund to raise millions in savings almost immediately.

The Swedish pensions authority terminated the fund in June 2016, identifying mis-selling practices and fraudulent transfers of savers’ money into Falcon Funds.

“The investigation found evidence that Ingmanson was behind the marketing and that he was the ultimate beneficiary of the unsuitable investments. All these amounted to a substantial and material breach of the cooperation agreement between the two parties,” Michael Westberg said.