Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

FCA cracks down on fledgling wealth firm with £1.5m shortfall

FCA cracks down on fledgling wealth firm with £1.5m shortfall

The Financial Conduct Authority (FCA) has clamped down on an investment firm after being alerted to a £1.5 million shortfall in its client monies and a £1.2 million shortfall in regulatory capital.

The FCA has ruled that London-based Hartmann Capital can no longer carry out regulated business, except settlement of certain transactions in non-derivative financial instruments, and it can no longer deal with client money and should terminate any derivative contract to which it is a party to.

In December 2013 the firm informed the regulator that although it should hold around £25 million of client money it had a £1.5 million shortfall and also had a £1.2 million shortfall for its regulatory capital.

The firm also told the regulator that if it was unable to pay its debts it proposed to use client money to fund payments.

At the time the firm took actions to ensure the situation did not worsen, including a voluntary cessation of new business.

In a supervisory notice dated 24 December 2013, the FCA said it had ‘serious concerns’ about the firm which had no reasonable short term prospect of making good its shortfall.

‘The risk of further loss to consumers because of Hartmann’s failings (including its failure to make good the client money shortfall and its proposal to use client money to fund further expenses of the firm) causes the authority to have serious concerns about Hartmann, such that the exercise of the authority’s own initiative power to impose [the bans] with immediate effect is an appropriate response to those concerns.’

‘In the FCA’s view there is no reasonable prospect of the firm being able to make good the client money shortfall and in addition there is a real risk that Hartmann may, whether or not in good faith, permit client money to be released from its client bank accounts or client transaction accounts- so resulting in a greater client money shortfall.’

In an announcement to its clients, the firm said that in December 2013 it had applied for a petition for the winding up of the company.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Sam Vecht: the best opportunities in frontier markets

Sam Vecht: the best opportunities in frontier markets

Blackrock's Vecht evaluates frontier markets and explains where he sees the opportunities

Play Where A-rated Pattullo is finding the best bond opportunities

Where A-rated Pattullo is finding the best bond opportunities

Henderson Global Investors head of retail fixed income explains how he is managing his fund against the surprise current monetary policy divergence.

1 Comment Play Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Our much anticpated new series is here! We hand a black cab driver a tenner and grill the manager of the 125-year Merchants trust until the meter runs out.    

Your Business: Cover Star Club

Profile: meet the duo at the heart of Hargreave Hale's succession plan

Profile: meet the duo at the heart of Hargreave Hale's succession plan

For the first time in the company's history a non-Hargreave is now at the head of the north west broker and asset manager

Wealth Manager on Twitter