Legal Troubles Mount for Commodities Fund Ebullio

A complaint against Ebullio Capital Management has been upheld by the Financial Ombudsman Service (FOS), and the fund has been ordered to pay compensation of £150,000, the maximum allowable, plus 8% interest, according to documents made available to Finance Magnates.

The complainant, known as ‘Mr J’, claimed that Ebullio breached the terms of an investment by not redeeming his money after a 30-day notice.

Mr J initially invested $180,000 between April 2010 and April 2011 in the Ebullio Commodity Fund, later exchanged for a different fund, Ebullio Invest, in 2012, and then again to Ebullio Return Invest SPV in 2013.

In June 2014, Mr J gave 30-days notice of his intention to redeem the investment.

FOS Sides with Investor Against Ebullio

When Ebullio failed to reply, Mr J contacted the fund’s administrator, which is Ifina according to a source, and repeated his redemption request. Though it was initially approved by Ifina, it was stopped by Ebullio’s Board of Directors.

Ebullio’s response to the FOS stated that the investment was subject to a ‘lock in’ period, which would end in late September this year.

However, an FOS adjudicator found that based on company literature, early redemption was permitted monthly with a 30-day notice, subject to a 10.5% penalty, a penalty that Mr J accepted.

The final decision from the FOS recommended that in order to resolve the complaint, Ebullio should pay the amount of the investment as at the end of June 2014 - about £225,000.

The maximum limit the FOS can tell a financial business to pay is £150,000, excluding interest and costs. The recommendation that Ebullio should pay the interest is intended to compensate Mr J for being deprived of the use of his money, according to the final decision.

The UK's Financial Ombudsman Service is an independent public body set up by law to resolve individual disputes between consumers and businesses.

FOS Decision Adds to Existing Troubles

In a separate legal action, a former partner of the hedge fund is alleging that a negotiated severance package has not been paid. The trial is set for June this year at the County Court at Central London, according to a document made available to Finance Magnates.

The legal troubles come after the hedge fund announced it will cease to continue trading as an FCA-approved firm earlier this year. However, the company is still listed as authorised on the FCA register. At time of writing, the address listed for Ebullio on the FCA register, 33 Clarence Street in Southend-on-Sea, is currently up for rent and awards won by the firm can be seen still on shelves in one of the slide show photos.

Lars Steffensen, Founder and Executive Managing Partner of Ebullio, did not reply to requests for comment. Ebullio's website is offline.

When contacted by email, a representative of Benjamin Capital ApS, a firm based in Denmark listed in Companies House as the only other current officer for Ebullio Capital Management, replied: “Benjamin Capital has been a passive investor in Ebullio Capital Management. We can unfortunately not assist you with any information as a matter of Compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term policy.”

30 March Update: After publication of this article, Companies House information was updated with a filing dated 17 March, showing Benjamin Capital's termination of appointment backdated to 15 January, 2016. Alexander Willson is now listed as a current officer, also backdated to 15 January, 2016 with the correspondence address listed as 33 Clarence Street in Southend-on-Sea. In addition, Ebullio's status is listed as "Authorised - applied to cancel" on the FCA register.