FIM paid heads millions

By Laurence Fletcher

LONDON (Reuters) - Fund manager FIM, which faces legal action by investors duped in the Madoff fraud, paid its top two directors 7.7 million pounds last year, accounts showed.

FIM, headed by Carlo Grosso and Federico Ceretti, came under investigation by the Serious Fraud Office this year over its role as consultant to the Kingate funds, according to a source close to the SFO.

Kingate lost billions with U.S. fraudster Bernard Madoff, who is serving a 150-year sentence after pleading guilty to running a $65 billion Ponzi scheme.

Company accounts show FIM Advisers made a profit before members' remuneration and profit shares of 11.5 million pounds in 2008, down from 12.9 million pounds in 2007.

The accounts were posted in the last few days. FIM did not immediately return requests for comment.

Grosso and Ceretti, who are the two directors of FIM Limited, the parent of FIM Advisers, were together paid 7.7 million pounds last year, the accounts show.

FIM, which closed down its U.S. operations this year, is facing a raft of legal action from investors in the Kingate Global and Euro funds, to which it acted as consultant, the documents also showed.

Kingate Global lost $2.7 billion and Kingate Euro lost 616 million euros in Madoff's fraud, which was revealed in December last year and which has hit a wide range of investors.

FIM has been served with proceedings in a U.S. class action by Kingate investors, while it knows of a similar claim filed in Bermuda of which it has not been formally notified, it said in the documents.

It has also been named in a further four class actions, while an Italian investment firm has made a claim in Italy for a net 13 million euros against FIM over advice to invest in Kingate funds.

Funds of hedge funds that FIM itself managed or advised on lost $146 million by investing with Kingate, it said.

The accounts show FIM's assets under management or advice tumbled to around $1.8 billion at end-December from $4.4 billion in March.

It attributed the fall to client redemptions due to "the well-publicised and dramatic events in the world's financial markets, and the resulting illiquidity and negative performance of many hedge funds".

(Additional reporting by Martin de Sa'Pinto; Editing by David Cowell)

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