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Sipp provider challenges Gibraltar regulator's investigation

Sipp provider challenges Gibraltar regulator's investigation

Listed Sipp provider STM Group has launched a legal challenge against the Gibraltar financial regulator's attempts to appoint inspectors to investigate compliance and governance concerns.

News of the legal challenge came after STM chief executive Alan Kentish was released without charge in an unrelated investigation led by the Gibraltar police. 

In a market update published today, STM Group said it was challenging the Gibraltar Financial Services Commission (GFSC) decision to appoint inspectors to oversee the company under Section 8(1) of the Financial Services (Information Gathering and Co-Operation) Act 2013.

This allows the regulator to appoint inspectors to investigate an individual who has carried out regulated business in Gibraltar. 

According to STM Group the GFSC visited its Gibraltar-based subsidiaries in September and October last year. This was followed by a one day site visit in March this year 'specifically to review the centralised compliance function in Gibraltar'.

'As a result of these site visits, the GFSC have stated they have some concerns regarding certain aspects of compliance, governance and controls and the provision of professional and trustee services,' STM added. 

The GFSC issued STM with notice of its plan to appoint inspectors on 6 November. After taking legal advice STM appealed the decision. As a result of an order of court on 8 November the notice of appointment required to put an inspector in place has been stayed until a further hearing on 20 November. 

'The company notes that the subsidiaries are in ongoing dialogue with the GFSC in relation to establishing a collaborative route forward and hopes to reach a resolution through this route,' STM said.

Shares in AIM-listed STM Group were suspended on Monday with no explanation given at the time. This suspension has now been lifted. 

'The appointments [of inspectors] have no impact on the company's ability to trade. However, the appointments could have a material cost impact on STM if the subsidiaries' appeal is unsuccessful,' the update added.  

In October STM Group said it would relocate its head office out of Gibraltar as the board reviews its options. The company trades in the UK, Malta, Jersey and Spain as well as Gibraltar. 

Kentish released

Kentish was released from arrest and police bail on 13 November, according to another update published by the company today.

Police arrested Kentish in connection to his role as a director at a client company of STM. According to STM's original update the beneficial owner of this company was involved in a tax dispute between two countries about their rights to tax him from 2008 to 2013.  

STM and Kentish maintained the allegations had no merit. Kentish submitted a judicial review application against the Royal Gibraltar Police on 9 November. No date has been set for a hearing. 

The GFSC has told the Gibraltar-based STM companies that its case has no connection to Kentish's arrest. 

'The GFSC advised the subsidiaries at the time of issuing the notices of appointment that the appointments are not connected to the recent allegations against Alan Kentish disclosed in the company's announcement of 30 October 2017.'

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