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Wealth manager collapses into administration

Arjent, a wealth manager whose former chairman faces fraud charges in the US, has collapsed into administration.

 
Wealth manager collapses into administration

Arjent, a wealth manager whose former chairman faces fraud charges in the US, has collapsed into administration.

The firm, which at one time managed £100 million on behalf of clients, had once boasted of bold regional expansion plans but was put into administration earlier this month.

Administrators HW Fisher said client money is not at risk as the firm was not a custodian. Arjent is not currently deemed by the Financial Services Compensation Scheme (FSCS) to be 'in default', the status given to firms the scheme believes is unable to pay claims against it. 

The published accounts of Arjent raise questions as to how the Financial Conduct Authority (FCA) continued to authorise the company. Moreover, an investigation by the US Securities and Exchange Commission (SEC) has revealed that the company’s struggles with solvency date back as far as 2010.

Ironically, the FCA subsequently widened Arjent’s powers, in 2014, to include financial advice, which enabled it to offer ‘a more complete service to its clients’ according to the accounts. The FCA refused to comment this week as to whether it was investigating the company. The firm was authorised to control but not hold client money.

Arjent was heavily loss making. It lost £2.6 million in the two most recent sets of accounts filed at Companies House. Moreover, the company’s turnover was propped up by ‘commission and introducer fees’ from a communications business controlled by Arjent’s controversial former chairman Robert DePalo.

In the most recent accounts to the end of December 2014, this generated nearly a third of Arjent’s total turnover.

DePalo, who is subject to criminal investigation in the US, also propped up the company with loans, either directly or through related companies.

The FSCS told Citywire Money sister title Wealth Manager that it was currently investigating a claim from a client against Arjent but refused to give more details. This may relate to a large claim specified in the Arjent accounts from a client who opened an account in 2007. 

The company says in its accounts that the claim was without merit, but acknowledged that quantification of the claim could be ‘seriously prejudicial to the position of the company’. 

DePalo was indicted by a New York grand jury in May 2015 on charges of defrauding UK investors of around $6.5 million relating to activities between 2010 and 2012.

DePalo faces criminal charges of larceny, money laundering, scheming to defraud and criminal possession of stolen property. The SEC has also brought fraud charges, and alleged that he defrauded investors in Pangaea, a holding company he co-owned.

DePalo’s appointment at the company was terminated in 2015.

In 2010, the business brought in David Couch, former managing director of rival wealth manager Rowan Dartington, to expand its proposition. However, Couch and his team, including chief operating officer Chris Deacon, walked out in April 2012 after a disagreement with the US parent.

The former management team was consequently taken to the High Court by Arjent, which was seeking to recoup over £2 million in damages. It is understood that this claim was settled.

There is no suggestion that Couch or Deacon, or the current chief executive Gary Schonwald and managing director James Hutson, have done anything wrong.

In February, Wealth Manager reported that four senior figures had left the company, including head of investment management Daryl Grundy and Philip Parson, chief financial officer.

Are you an Arjent client or were you offered shares in Pangaea and would like to share your story? Get in touch at news@citywire.co.uk.

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