The Financial Services Authority on Monday abandoned its five-year probe into the split capital investment trust scandal after reaching a deal with four key individuals that restricts their roles in the industry for the next one to three years.

The settlement marks the end of a scandal in which more than 25,000 private investors lost money between 2001 and 2004 after buying shares in split-capital trusts that they had been told were virtually risk-free.

Since 2002 the FSA has been investigating whether investment managers and brokers colluded between September 2000 and February 2002 to prop up the share prices of funds through complex cross-shareholdings.

The deal follows an earlier no-blame settlement negotiated in 2004 by the FSA with 20 leading firms in the split-cap sector, which agreed to pay £194m into a compensation fund for investors.

The settlement comes as John Tiner, the FSA’s chief executive who led the negotiations, prepares to leave the FSA in July.

The FSA has now dropped its investigation into BC Asset Management and BFS Investments, the last firms still under investigation. They did not take part in the earlier settlement or contribute to the compensation fund.

The FSA said it had found no regulatory breach and had agreed not to fine them or take further disciplinary action.

Mark Dampier, head of research at financial advisers Hargreaves Lansdown, said the investigation had been a “complete waste of time”. He said: “We have a non-verdict. While some of the directors involved got huge amounts of money, private investors lost out.”

David Bruce, chief executive of BC, has agreed to resign and not to take on a senior management role in an FSA-regulated firm until April 2009.

Anthony Reid, former chief executive of BFS, has agreed not to take a top role in the industry until October 2009.

Roderick Crawford, a former executive at Collins Stewart Tullett, which took part in the 2004 settlement, has also agreed not to take a senior role until October 2009. Paul Glover, who worked with him at Collins Stewart, cannot take a role liaising with customers until October this year or a senior role before October 2008.

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