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The collapse of an investment fund affected by a fraud will often lead to disputes between the investors who were paid out before the discovery of the fraud, the investors who gave notice to redeem prior to the discovery of the fraud, and the investors remaining in the fund when it collapsed. Following the recent decision of the Privy Council in SEB -v- Weavering Macro Fixed Interest Fund  UKPC 36, given on 29 July 2019, it is an appropriate time to review the law in this area and to examine this decision alongside earlier decisions of the Privy Council given in the context of investment funds affected by fraud.
The terms of the articles will determine the time at which redemption has occurred and the consequent rights and obligations regarding payment of the redemption proceeds.
The significance of this decision is that it confirms that redemption is governed by the terms of the articles, and it will be to the articles that one should look for a solution to the respective rights of competing investors upon insolvency. That competition is between investors claiming to be creditors by reason of having redeemed prior to insolvency and the investors who have not redeemed.