Keydata invested in "life settlement funds", which buy and sell US life insurance and generate high returns. In June 2009 the FSA applied for Keydata's closure "to protect investors", saying it was concerned about "potentially missing assets".
It emerged that �103m of life insurance policies managed by a Luxembourg business, SLS Capital, and sold to Keydata investors as low-risk bonds might have been "misappropriated". SLS was controlled by David Elias, an entrepreneur, who died in Singapore in June 2009.
The probe also scrutinised Lifemark, a second Luxembourg-based group that packaged Keydata products.
Stewart Ford, founder of Keydata, said: "The decision of the SFO to drop its investigation into Keydata is not surprising and vindicates what I have been saying from the outset of this saga. Prior to the catastrophic intervention of the FSA, which forced both Keydata and Lifemark into administration, Keydata was a successful company that had delivered on its promises to investors.
We have no doubt that, but for the FSA intervention, all Keydata investors in Lifemark and SLS products would have received their promised returns of income and capital."
The SFO said it would concentrate on the missing funds at SLS and "provide a further progress update in July 2011".
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