A litigation investment fund under Securities and Futures Commission (SFC) investigation is being placed into liquidation following the discovery of "financial irregularities" by the fund's new advisory team. The fund in question is Centaur Litigation SPC, a reported HK$1.2 billion investment litigation fund, and was pitched to investors in Hong Kong and overseas as a fund that would underwrite lawsuits in various jurisdictions and take a portion of any payout. We are concerned about the image and culture of the industry LESLIE PERRIN, LITIGATION FUNDS GROUP "As a result of an internal audit and independent review, the new management team has identified a number of financial irregularities in relation to certain funds within the group," wrote Simon Franklin and Stuart Hackett, directors of Buttonwood Legal Capital, an advisory firm to Centaur, in a letter to investors dated May 21. "By placing the funds in provisional liquidation the group will be better positioned to effect a restructure of operations. This as (sic) an interim measure to protect the assets, reduce costs and provide improved transparency for investors." The directors wrote they remained "committed to completing the portfolio of cases and returning the full net proceeds to investors". Franklin and Hackett did not respond to e-mails from the South China Morning Post . Buttonwood was founded by Brendan Terrill, though it is not clear if he is still connected to the firm. Terrill did not reply to e-mails. Aside from Centaur Litigation SPC, two other funds have been placed in provisional liquidation: Centaur Litigation Unit Series 1 Limited and Centaur Litigation Limited. Concerns about Centaur Litigation SPC were first published in February in an expose by David Marchant, editor of the Offshore Alert website, which raised red flags about the fund's operation and questioned how the fund could guarantee returns. In mid-March, the SFC served search warrants and seized documents and records from Buttonwood's former Hong Kong office and the offices of the fund's administrator and from Buttonwood's removals firm. An SFC spokesman declined to comment. In April, the Post reported that business partners listed on Centaur Litigation SPC's client literature denied having any relationship with the fund. The fallout from earlier reporting has already impacted a still nascent sector struggling to gain credibility in a crowded alternative asset class market. "We are concerned about the image and culture of the industry. Clearly our commercial future rests upon making sure we have a clean industry," said Leslie Perrin, chairman of the Association of Litigation Funders (ALF), a British-based regulator founded in 2011 to set codes of conduct and handle complaints. Law firms and investment funds would be looking at their counterparties to ask where the money is coming from, he said. Centaur was a feeder fund to Jersey-based Argentum Capital, which has since resigned its membership of the ALF and the firm's shares were delisted from the Channel Island Securities Exchange in late February. One of Argentum's non-executive directors, former Court of Appeal of England and Wales judge Sir David Keene, has stepped down. Argentum has restructured its advisory team and "intends to meet all of its funding commitments in accordance with the funding agreements in place with case solicitors", said a company statement sent to the Post . Perrin said litigation funds were not suitable for ordinary retail investors. A previous version of the story mentioned that Argentum Capital's website was inactive. The company did not have a website.