A Tyneside wealth management firm has been shut down following Financial Conduct Authority action.
WealthTek LLP, which trades as WealthTek, Vertem Asset Management and Malloch Melville, was ordered to cease operations immediately in a move the FCA says was taken to protect consumers amid "serious regulatory and operational issues" coming to light.
At the same time the Cobalt Business Park-based firm, which employs about 20 people, was placed into special administration - a court-appointed insolvency process for companies that hold client money and are regulated by the FCA. WealthTek's affairs are now being handled by joint special administrators from BDO LLP, including Shane Crooks, Mark Shaw and Emma Sayers.
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Under regulations introduced in 2011, the trio's work will include a return of client money and assets as soon as possible and efforts to rescue the firm as a going concern or failing that, to wind it up in the best interest of the creditors. BDO said it would be writing to all clients and creditors of WealthTek once it had conducted an assessment of the money it holds.
The financial watchdog said Northumbria Police had arrested an unnamed, 48 year-old man in connection with the case, and the FCA had later interviewed him under caution.
In 2021 WealthTek expanded into its current Cobalt premises from a previous base in Jesmond. At the time, the firm's founder and CEO, John Dance, said his company was preparing for "considerable growth" over the subsequent three years.
Mr Dance was joint-owner of the successful racing horse Bravemansgame, which was due to run in today's Alder Hey Aintree Bowl Chase at Aintree. However, the British Horseracing Authority has confirmed the horse had been withdrawn owing to new information and a court order relating to the WealthTek case.
A statement from the BHA said: "In light of new information, including a court order, provided to the BHA on Wednesday 12 April by the Financial Conduct Authority (FCA) Bravemansgame is no longer able to take part in the race and has been withdrawn. The BHA will continue to liaise with the FCA and other affected parties."
The FCA said: "Various urgent actions have been taken in order to protect WealthTek’s clients following the FCA becoming aware of serious regulatory and operational concerns relating to the firm. The FCA used its powers under the Investment Bank Special Administration Regulations 2011 to apply to court to place WealthTek into special administration."
It also said: "On April 6, 2023, following an urgent application made by the FCA, the High Court has appointed Shane Crooks, Mark Shaw and Emma Sayers of BDO LLP as Joint Special Administrators of WealthTek Limited Liability Partnership (WealthTek). WealthTek also has the trading names Vertem Asset Management and Malloch Melville. The FCA also ordered the firm to immediately cease carrying on all regulated activities on April 4, 2023.
"Northumbria Police, working in partnership with the FCA, arrested a man aged 48 in connection with these concerns and the FCA later interviewed the individual under caution.
"WealthTek is an FCA authorised and regulated wealth management firm which provides discretionary, advisory and execution only services to their retail clients. The FCA is in close contact with the joint special administrators and further information will be made available by them in due course."
Clients of WealthTek and its trading names are advised to contact the joint special administrators on the following email address: WealthTekclients@bdo.co.uk
John Dance was contacted and given the right of reply to the actions taken by the FCA.
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