March 9, 2009 / 7:55 AM / 11 years ago

UPDATE 3-Resolution's Cowdery, chairman, execs probed by FSA

* Says FSA investigating Biggs over former role

* Founder Cowdery, CFO Newman also being probed

* Says other key Resolution staff under investigation

* Buyout firm says investigations may delay takeover deals

* Shares down 11 percent

(Adds analyst comment, names of executives, updates shares) By Paul Hoskins

LONDON, March 9 (Reuters) - The founder of British buy-out company Resolution Ltd RSL.L, insurance entrepreneur Clive Cowdery, is being investigated by Britain’s financial watchdog (FSA), as is company chairman Mike Biggs and three others.

Resolution Ltd said the probe into their actions as directors of Cowdery’s previous investment vehicle, also called Resolution (Plc), would undermine its core business acquiring financial services firms because such deals needed Financial Services Authority approval.

“The company would not expect to ... complete any acquisition until this matter has been resolved,” Resolution Ltd said in a statement on Monday.

The FSA is also investigating three other former Resolution Plc executives who along with Cowdery are involved in running the new venture under the stewardship of John Tiner, a former chief executive of the FSA.

Resolution shares were down 11 percent at 96 pence by 1340 GMT to be below their 100 pence issue price for the first time since the company raised 600 million pounds ($853 million) from investors in a stock market listing in December.

The company’s ability to raise so much money in the midst of the financial crisis was seen as a vote of confidence in the business acumen of Cowdery and his track record of delivering bumper returns for investors.

Analysts at Cazenove cut their rating on Resolution shares to “in line” from “outperform”, saying funds from the IPO meant it had cash equating to 98 pence a share but that the investment case for buying above that level had temporarily been removed.

“The group’s exotic governance structure is not helpful as it might affect perceptions of the difficulty of getting cash back in a worst case,” Cazenove said.

Resolution Ltd is incorporated in Guernsey and its board consists of Biggs as chairman and four non-executive directors.

Operating functions are the responsibility of Resolution Operations LLP (ROL) which is owned by Tiner, Cowdery and the three others under investigation.


A spokesman for Resolution Ltd confirmed Cowdery was among those being investigated, as are ROL Chief Financial Officer Jim Newman, Head of Mergers & Acquisitions Ian Maidens, and Head of Operations Brendan Meehan.

That means CEO Tiner is the only senior Resolution executive not being investigated.

Resolution said it had appointed Phil Hodkinson as senior independent director to chair a committee dealing with the FSA probe. Hodkinson, a former finance director at HBOS (LLOY.L), was first named as a Resolution director in September.

The company said it was assisting the FSA in the hope of bringing the case to a “swift conclusion”.

Biggs, Cowdery and the others face questions in relation to their positions as former chairman and executive directors of Resolution Plc which is now owned by Pearl Group Holdings.

Resolution Plc, founded by Cowdery, accepted Pearl’s takeover offer of almost 5 billion pounds in 2007, yielding lucrative returns for investors who backed it, and is the model for the new Resolution Ltd business.

The period under investigation runs from October 2007 to May 2008, the period when Pearl was in negotiations to complete its acquisition of Resolution Plc.

Resolution Ltd declined to comment on the nature of the investigation. It said Biggs continued as chairman. (Additional reporting by Myles Neligan; Editing by Dan Lalor) ($1 = 0.7030 pound)

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