CL-2020-000117 - [2025] EWHC 1620 (Comm)

The claimant alleges and the evidence shows that Falcon was established by Mr Serwin together with Messrs Bishop and Gergeo (both of whom were defendants to these proceedings but have compromised the claims made against them by the claimant). Falcon was registered on the Swedish pension platform and specifically targeted Swedish pension savers. Although Falcon was apparently established in a conventional manner with independent investment managers being appointed for the purpose of purchasing appropriate investments on behalf of the Falcon Fund, in fact Mr Serwin secured the appointment of investment managers who at the instigation of Mr Serwin (together with Messrs Bishop and Gergeo) purchased synthetic or derivative products known as exchange traded instruments (“ETIs”) from entities controlled by Mr Serwin and Messrs Bishop and Gergeo. An ETI is supposedly an asset backed instrument the value of which is linked to the assets held by the bond issuer. It is a financial product that permits what would otherwise be illiquid assets to be traded on exchanges in much the same way that shares in publicly owned companies are dealt with. The fund was also used to purchase shares in Werel, again at artificially inflated prices.

The purchases that form the basis of the Falcon element of the claim are set out again below:

In addition the claimant maintains that it is entitled to recover all the losses attributable to a series of disposals between September 2015 and August 2016 of other investments made by Falcon containing pension savers’ funds, which it is alleged were purchased collectively for €45.7m and sold collectively for sums totalling €23.6m thereby resulting (so it is alleged) in a loss of €22.1m. In the course of the hearing I expressed some doubts about this claim since the investments purchased all appear to be bona fide investments and the loss on sale being the result of the movement in market prices between the date the products were purchased and the date when they were sold. Whilst I can see that a claim might be made in relation to these items if and to the extent it could be shown that fraudulently enhanced commissions had been charged by entities controlled by the defendants who acted as intermediaries in the purchase of these items by Falcon, it is difficult to see how losses on subsequent sales of these products can have been the result of the pleaded fraudulent scheme. At the conclusion of the hearing it was left that the claimant would submit supplemental written submissions in relation to this part of the claim. I return to this issue at the end of this judgment.

Mr Serwin instigated the formation of Falcon and its application to the Maltese Financial Services Authority for the licences that enabled it to operate as a UCITS fund and so become registered on the Swedish PPM platform referred to earlier in this judgment so as thereby to enable Swedish savers acting by the SPA to acquire investment shares in Falcon. In an email from Mr Serwin to Mr Bishop dated 27 September 2013, Mr Serwin described the structure that was planned with Falcon’s fund being managed and investment decisions taken by a fund manager called Calamatta Cuschieri Investment Management Ltd (“Calamatta”) with the Bank of Valetta acting as custodian and another entity (Valetta Fund Services (“VFS”)) administering “… back office and structure…”. Mr Serwin went on to say that he had appointed a board of directors of Falcon but that he (together with at least Mr Bishop) was entitled to buy all the shares in Falcon at any time, could change the fund manager for any other licenced manager and then continued that this meant “… we are in control, but it won’t show to anyone which is good right now, given the situation we´re in.” The latter reference was to the scrutiny to which the Optimus arrangements was then being subjected in Sweden. He added that his plan was that “[w]e get our own … licensed company ready in 2014 and we take over the management of the three funds and the shares of the SICAV.”

The duplicity involved in this exercise is apparent in part from the unchallenged evidence of Mr Antonio Fenech, a former Finance Minister of Malta who became a non-executive director of Falcon on 20 November 2013. He was approached via the intermediaries identified by him in his witness statement and at that time says he was informed that the “… purpose of Falcon was to act as an authorised investment fund to Swedish pensioners on the Swedish authorised pensions platform…” and that the individual behind the project was Mr Serwin. His understanding derived from his conversations with Mr Serwin was that Mr Serwin had created the whole Falcon structure but that he was “… just the promoter who would market the fund on the Swedish pensions platform.” In fact that was untrue as is apparent from the outset as the email referred to above demonstrates.

In any event, on 22 November 2013, Falcon was incorporated in Malta as a public limited investment company, and on 27 December 2013 (a) the Maltese Financial Services Authority granted it the necessary licences; (b) Calamatta was appointed Falcon’s investment manager; (c) Bank of Valetta was appointed custodian and (d) VFS was appointed as Falcon’s administrator. Falcon established and operated three sub-funds: (i) Falcon Aggressive Fund; (ii) Falcon Balanced Fund; and (iii) Falcon Cautious Fund and on 5 August 2014, Falcon was admitted to the PPM platform, and the sub-funds became available for Swedish pension savers to invest in by the SPA acquiring investor shares in each of the sub funds.

Thereafter Mr Serwin took steps to obtain control of the Falcon structure so as to facilitate the investments that are the subject matter of the Falcon Phase claim. The first of these steps was to replace Calamatta as Falcon’s investment manager. As I have explained this role was critical because it was the investment manager that took the investment decisions on behalf of Falcon. As Mr Fenech states in his statement, Calamatta was a “very reputable organisation” whose involvement had led him to think that Falcon was a “… a bona fide operation, well intended and well structured.” He had understood that Mr Serwin “… was setting up his own asset management company, Falcon Asset Management Limited (“FAML”), which would assume the role of the fund manager for Falcon when Emil obtained the necessary license for FAML…” from the Maltese Financial Services Authority.

Mr Fenech says in his statement that Calamatta “… informed us that the licensing process for FAML was taking too long and since Calamatta do not usually operate third-party funds, they would prefer us to move Falcon to a different asset manager if the situation was going to prolong any further.” This led to the identification as a replacement of an entity called Temple Asset Management Limited (“TAM”). This is not reflective of the Falcon minutes in relation to this issue. It is necessary to emphasise at this point that Mr Serwin was anxious to distance himself from Falcon. This is apparent from the email referred to above and is also apparent from email responses to the SPA concerning Mr Serwin’s involvement in Falcon. In fact he was intimately concerned with its operations. He had a dedicated Falcon email address, he met at least its initial costs – see 23/14(iv) of the Falcon board meeting minutes dated 10 July 2014 – and he attended at least 13 of the Falcon board meetings in the period between April 2014 and June 2016, in each case being described as attending as “Observer” or similar. Notwithstanding all this, in response to a query from the SPA Mr Camilleri of VFS stated that Mr Serwin “…has no role in the Falcon set up. He is neither a founder shareholder, nor a director, nor any other appointee of the scheme or its service providers. In effect Emil results to us as having been the “initiator” of the initiative, which was at a later stage “taken over” by Stellum in Sweden…” The reference to “Stellum” is to Stellum Kapitalforvaltning AB (“Stellum”), a Swedish entity that acted as agent for Falcon in Sweden. It is said by the claimant to be controlled by Mr Roger Hassanov, an individual said to be an associate of Mr Serwin who was a director of the 10^th defendant from 25 November 2015 until 25 January 2016. I infer that Mr Hassanov and Mr Serwin were associates at the material times given the involvement of Stellum as a front to conceal the involvement of Mr Serwin in the affairs of Falcon from the SPA amongst others.

I return to the point concerning the reasons for replacing Calamatta with TAM. Contrary to what is said by Mr Fenech in his statement, the minutes for the Falcon board meeting for 21 October 2014 (attended by Mr Serwin as “Observer”, chaired by Mr Fenech) record that:

“The Board of Directors of the Company having taken note of the letter received by Stellum requesting the Board of Directors of the Company to consider assigning the management of the portfolio to Mr Barbaros Okten, who has extensive experience in the Swedish market and knowledge of the investment appetite of the investors in the various funds. From discussions held with Calamatta Cuschieri Investment Management Limited it emerged that it is not their policy to engage a third party as their portfolio manager and that however they would not stand in the way of the Board of Directors of the Company should they wish to pursue this further and thus consider an alternative arrangement which may not involve directly Calamatta Cuschieri Investment Management Limited.

Following discussion, the Board of Directors of the Company RESOLVED to favourably consider the request of Stellum for the appointment of Mr Barbaros Okten as the portfolio manager of the Company's sub-funds and to authorise any one Director to negotiate the terms of appointment with Temple Asset Management limited, which company will be shortly engaging Mr Barbros Okten.”

The points that emerge from this document are that (a) Stellum ostensibly wished Calamatta to appoint Mr Ökten as manager of the Falcon portfolios; (b) Calamatta was not prepared to do so; and (c) the board of Falcon were nonetheless willing to replace Calamatta with TAM for the purpose of facilitating Mr Ökten’s appointment as manager of the Falcon portfolios. In my judgment this is significant because (i) the emails referred to earlier demonstrate the connection between Stellum and Mr Serwin and (ii) the minutes demonstrate the degree of actual control exercised by Mr Serwin over Falcon. It demonstrates the importance that Mr Serwin placed on Mr Ökten’s appointment as manager of the Falcon portfolios. Mr Fenech’s evidence is that it was Mr Serwin who introduced TAM. I have no doubt that is correct in the circumstances. I have no doubt either that Mr Serwin wanted Mr Ökten appointed in order to seize or increase control over Falcon’s investment decisions. The importance that Mr Serwin placed on Mr Ökten is apparent from the email dated 22 January 2015 from Mr Serwin to Mr Bishop in which he said:

“Jan and Ulf is a big problem, they-re trying to convince Mats not to bring [Mr Ökten] in. They need to get out of the office now. They could jeopardize our whole business.

I’ll talk to Roger to calm Mats down, but please get them out of there asap and help me push Mats to do the right thing here.”

On 30 October 2014, there was a meeting of Falcon’s board chaired by Mr Fenech. That meeting was attended by Mr Serwin who is described as being an “Observer” at which it was resolved to terminate Calamatta’s mandate and appoint TAM as the investment manager of Falcon and its sub-funds with effect from 1 January 2015. These arrangements were carried into effect by an Investment Management Agreement with TAM with Mr Ökten being the portfolio manager. Mr Ökten was handsomely rewarded for his activities for which he billed Solid Venture Capital Limited (“SVC”) whose shareholders were Messrs Serwin and Gergeo until 7 October 2015 and Mr Gergeo thereafter. Thereafter Mr Serwin in combination with Mr Bishop and Mr Gergeo exercised control over Falcon’s investments. Their involvement is apparent from the documentation relevant to each of the investments the subject of this claim. Mr Ökten was the portfolio manager of TAM until 28 May 2016, at which point he resigned and disappeared.

I now turn to each of the ETIs the subject of this claim. Each was created by Argentarius ETI Management Ltd (“Argentarius”), a Maltese securitisation agent controlled by Mr Andreas Wölfl. The underlying structure of each of the ETIs was broadly similar with there being an issuer of the ETI concerned and a collateral obligor with the issuer issuing the traded securities and the collateral obligor being a wholly owned subsidiary of the issuer that typically issues a performance linked bond to the issuer which represents the collateral. Although it will be necessary to consider each of the products the subject of this claim, certain points of general application should be noted at the outset. Firstly, if an asset backed security or bond was being purchased as an investment by a funder representing the Swedish savers’ life savings, it was reasonably to be expected that at least some “due diligence” investigations would have been carried out by the investment manager to test the availability of the alleged asset base and its likely value. Where what is being purchased is a shareholding in a company then it is to be expected that an attempt would be made to value the company by at least one of the conventionally used valuation models (net asset, multiplier of profits or EBITDA and discounted cash flow being frequently used and familiar models). No such valuations were carried out or if they were records of them were not kept.