The Financial Services Authority (FSA) has confirmed that Pritchard Stockbrokers gone into administration.
Pritchard entered the FSA's special administration regime (SAR) on 9 March 2012 and Timothy Ball, Roderick Weston and Alistair Wood at Mazars have been appointed joint special administrators.
On 29 February, another stockbroker, WH Ireland, announced that it had taken charge of assets, but not money, belonging to the majority of Pritchard Stockbrokers’ customers. This means that, in the near future, former customers of Pritchard Stockbrokers will be able to start dealing again through WH Ireland.
On 10 February, the FSA issued a supervisory notice stopping Pritchard carrying out its business due to client money failings, freezing Pritchard’s assets and the investor money and assets it held.
The FSA said it took this action because it had serious concerns about the way Pritchard had been running its business and handling investor money. It added it was concerned the firm had failed to adequately protect the money it held on behalf of investors, and that it had allowed this money to be used to meet its own costs.
Pritchard is the second firm to go into special administration after MF Global entered the regime in October last year.
The SAR was introduced by the regulator in February 2011 and differs from conventional administration in that it aims to return assets to clients as soon as possible, rather than focusing solely on recouping money for creditors.
The FSA said the SAR had three key objectives:
- to ensure the return of client assets as soon as practicable;
- to ensure timely engagement with market infrastructure bodies and the authorities;
- and either to rescue the firm as a going concern or wind it up in the best interests of the creditors.
In the regular administration process only the third of these would apply, the FSA said.
IFA and financial services firm Merchant House Group was caught up in the fall-out from the restrictions placed on Pritchard, as its structured product subsidiary Merchant Capital had £8.8 million on account with Pritchard Stockbrokers at the end of June 2011.
Merchant House Group had said it could not determine whether its clients would lose out as a result of restrictions on Pritchard Stockbrokers.