Bermuda investment firm Emerald Financial Group is facing a winding-up action, after financial regulator the Bermuda Monetary Authority took enforcement action yesterday.

The news came after the arrest of a 45-year-old woman yesterday in connection with an ongoing Police investigation into Emerald.

Emerald, which was launched in 1992 by husband and wife, David and Antoinette Bolden, offers pension and investment funds management, investment advisory services and equity trading services.

Yesterday, Emerald's offices in Wessex House, Reid Street, were closed for business and a Police officer was posted at the door.

In a brief telephone interview with The Royal Gazette yesterday, EFG president Mr. Bolden, 46, said: "Clients' money is secure."

He referred all questions to attorney Kevin Bean, of Bean & Associates, who did not respond to requests for comment by press time.

Mrs. Bolden, 45, a chartered accountant, is EFG's managing director. She worked as accounts division manager for OIL Insurance between 1992 and 1995, before she teamed up with her husband full-time at Emerald. The couple co-founded Emerald 17 years ago.

The BMA is seeking the winding up of EFG and two other entities in the group, Emerald Investment Management Ltd. and Directrade, an online stock-trading business.

The regulator said its actions were separate from those of the Police, but that the arrest "has exacerbated the Authority's concerns about the three entities and their suitability to conduct licensed business".

BMA chief executive officer Matthew Elderfield said: "The enforcement actions we have taken today and over the past months demonstrate that the Authority will not tolerate regulatory shortcomings which put investors at risk.

"We will be working closely with the Official Receiver to ensure information is made available to investors as quickly as possible."

A Police spokesman did not wish to comment further on the arrest or the investigation.

Professional services firm KPMG has been appointed to coordinate the winding-up process, on behalf of the Official Receiver, who is the Registrar of Companies. KPMG will conduct a reconciliation of all client accounts to determine the position with respect to investor funds.

KPMG's Charles Thresh will deal with queries from investors.

"We had many calls today and we're working our way through those enquiries," Mr. Thresh said last night.

"We have come in and secured the company's premises. We know investors are concerned about their money and we will try to broadcast something meaningful to investors as soon as possible."

Mr. Thresh said the best way to contact him was via e-mail at emeraldinfo@kpmg.bm.

The BMA stated that clients with investments in securities established via Directrade are still able to trade those investments, using an alternative broker.

In addition, the maturity dates in place for mutual fund investments made through Emerald Investment Management remain in effect.

Finance Minister and Deputy Premier Paula Cox said yesterday that she could "appreciate the public concern regarding this matter".

"Such matters are complex and involve a number of Bermudian agencies," Ms Cox said. "All steps are being taken with a view to act with despatch to protect the interests of investors and prudential and appropriate legal action is being taken in that regard.

"It should also be noted that the Government, in revamping the legislation in 2003, enhanced the legislative regime to better protect investors by adopting a number of new legal remedies.

"Of primary importance is the need to protect investors' rights, but at the same time there is the need to ensure due process."

The news came as a shock to some investors, who yesterday called this newspaper seeking more information.

One woman said: "I had a fund with Emerald that matured yesterday (Tuesday). I sent an e-mail to Emerald to ask when I could expect to see the funds appear in my account and did not get a reply. Then I heard about the arrest."

She did not disclose how much she had invested with Emerald, but described it as "a lot". "I know other people who have a lot more money in there than I do," she added.

Another caller said his current holdings amounted to $14,000, divided between two Emerald funds.

"My pension fund [with another investment company] fell by a quarter last year," said the man, who said he was nearing retirement. "This is the last straw."

On March 12 this year, the BMA placed restrictions on the marketing of a fund provided by EFG, which prevented the firm from conducting most forms of regulated investment business, including the provision of investment advice, accepting new funds for investment or reinvesting existing funds.

The restrictions were posted on EFG's business information entry on the BMA's website on April 7, after a period of time allowed for the company to make representations about the regulator's action. But no press release was issued.

In the early stages of an investigation, the regulator walks a tightrope between keeping the public fully informed and causing a panicked run on the entity, which damages investors' interests.

"The Authority has taken this action with the protection of investors as its paramount objective, and based on its concerns about regulatory irregularities within the three licensed entities which have led to increasing levels of regulatory oversight and enforcement action over the past year," the BMA statement on the winding-up action read.

One well known person mentioned on the staff directory on Emerald's automated telephone system is United Bermuda Party MP Donte Hunt, who is described as a "vice-president".

Mr. Hunt said yesterday that he had no connection with Emerald's financial side but had been doing some consultation work for the group's technology subsidiary Bold Global Ltd. for around three months, without a formal employment agreement.

He said he had learned of yesterday's arrest when he showed up at the Emerald offices and spoke with a police officer at the scene. Mr. Hunt added that he was "shocked and disappointed".