Quadris was set up on the Isle of Man in 2001 as a multi-class qualifying fund that invested in sustainable forestry plantations in Brazil.
The fund posted a $20m (£15.7m, €17.8m) loss in 2016, with auditors expressing concern about the company’s ability to continue trading.
A letter to shareholders, dated 20 February, advised that IoMFSA had named Gordon Wilson as controller of the Quadris fund.
The Isle of Man regulator launched an investigation into the fund in March 2017.
Adrian Page, managing director of Financial Page International, told International Adviser that he had lodged a formal complaint with the IoMFSA last week.
He criticised the regulator for “failing to regulate/monitor the fund” and Wilson for not keeping investors informed of developments.
“We are talking about people that trusted in the fund and, more importantly, the back-up that gave them confidence that this fund was regulated by the IoMFSA as a professional investor fund.
“Even though the investors knew their bonds from their equities and their commodities, in my opinion the IoMFSA seems to have completely deserted the investors as we stand today,” Page said.
Karen Badgerow, chief executive of the IoMFSA, told IA that “unfortunately, we are unable to provide any substantive comment with respect to this particular matter”.
She cited statutory provisions that prevent the regulator from disclosing matter under its remit.
Badgerow highlighted, however, that the Quadris fund, as a qualifying fund, was not licenced or authorised by the IoMFSA and should not have been sold to the general public.
“The Authority’s remit for such schemes is to register them, receive notifications of change and supervise their appointed Isle of Man functionaries.”
In May, Isle of Man treasury minister Alfred Cannan confirmed that the IoMFSA is “undertaking a review” of unregulated funds and will “make appropriate recommendations for change”.
Wilson declined to comment when contacted by IA but confirmed that the IoMFSA has received the correspondence and the regulator is “considering Mr Page’s email”.
In his emails to the Isle of Man regulator, Page demanded to know what action is being taken against the then-board of Quadris directors whose actions were “so very clearly not in the best interest of their shareholders”.
He also questioned the rationale behind the IoMFSA’s decision to appoint a controller and asked what the expected ultimate benefit to shareholders was.
“It is truly a tragic case – in my humble opinion – of dereliction of duty on behalf of the FSA and particularly the fund’s board and its former chairman, John Bourbon.”
Bourbon was previously a senior official at the IoMFSA and a director of the Quadris fund until he resigned in July 2016.
He was also a non-executive director of the Premier Group, another environmentally focused fund that was wound up by the IoM authorities last year.
He described the regulator’s decision to investigation allegations of mis-selling by the Premier Group as a “witch hunt”.
Page told the IoMFSA that “there are a great many of us that strongly and fundamentally disagree with Gordon Wilson’s assertion that the fund is ‘in default’”.
He advised the regulator that it must challenge the default assertion, as it will open a one-year legal deferral and strengthen the fund’s position.
“The FSA needs to start fulfilling its obligations of duty and urgently help investors ward off a hostile grab of their assets and help us restructure the fund so we can recover our investments,” Page wrote.