The joint administrators of Pritchard Stockbrokers has begun paying the first interim distribution to clients at 50p in the pound.
Mazars was appointed special administrator on March 9 after the FSA suspended Pritchard’s permissions due to concerns about the way it handled client assets and monies.
On the same day, structured product provider Merchant Capital said it would transfer all £350m of clients’ non-cash assets from Pritchard to new custodian Reyker Securities but cash assets were frozen by the regulator.
Payments will be made to all clients who have agreed their client cash balances. Around 3,300 claims have been agreed to date with claims totalling approximately £13.7m. The first tranche of interim distribution payments was issued on 31 July.
Pritchard client cash balances, known as ‘pooled client monies’, which had not been sold prior to the appointment included over 11,300 client accounts with claims of over £26.5m.
Mazars says: “Extensive work has been carried out on pooled client monies, with considerable difficulty being encountered in the reconciliation process. The work agreeing these client cash balances is well advanced and the current estimate is that there may be a shortfall in pooled client monies of approximately £2.8m.”
Mazars has also begun negotiating with the Financial Services Compensation Scheme about the shortfall in client monies.
The FSCS is to start contacting Pritchard clients about their entitlement to compensation.
A total of £1.4m has been paid to approximately 2,800 clients with ‘post pooled monies’, client monies received after 10 February. Mazars has received a further £400,000 which will be paid to clients once it has been reconciled.
Lead joint special administrator Tim Ball says: “Pritchard has been challenging and complex and has required an intensive team effort with input from various sources, all with the aim of getting client monies identified and paid back to them as soon as possible.
“To have worked towards getting to a position in Pritchard whereby the bulk of the clients have now had their stock successfully transferred to the new stockbroker; and the joint special administrators paying out such a large first interim dividend to clients as regards their cash claims within five months of the appointment, is testament to the skill and commitment of all involved in what is only the second such example of this new procedure.”
Mazars says the process of transferring the estimated 6,400 clients with £380m in non-cash assets is “well advanced” with most client stocks reconciled and transferred and the remainder is the process of being transferred. It says it continues to deal with additional client claims against Pritchard, such as shortfalls in stock assets and general creditor claims.
If you have been effected by this and have any queries, please do not hesitate to contact your Advisor today.