As you are aware, Mark Ford, Adam Stephens and Henry Shinners of Smith & Williamson LLP were appointed Joint Special Administrators (“the JSAs”) of Reyker Securities Plc on 8 October 2019.
All assets held by Reyker on behalf of its clients continue to remain safe and under the control of the JSAs.
The JSAs have published as of 22 October 2020 an update for the company’s clients and creditors. This may be viewed at https://smithandwilliamson.com/reyker-securities-plc.
We are providing below a relevant summary of this update which specifically references Custody Assets (i.e. stocks and securities) and Client Money (cash).
Transfer of Custody Assets
- The transfer of Custody Assets (but not Client Money) has been a court-led process and required approval by the Court of the Distribution Plan, a detailed legal document with accompanying asset schedules and evidence collated by the JSAs, which detailed the process by which the Custody Assets will be returned to Clients ensuring Clients’ rights are protected.
- The Distribution Plan deals with the return of Custody Assets (being electronic and paper-based stocks and securities) and Corporate Action Assets (being dividends, interests, redemptions, etc. received in respect of Custody Assets following 08 October 2019);
- The JSAs have now confirmed that the Distribution Plan was approved by the Court at the open hearing which was held on Friday, 16 October 2020 at 10.30am (UK time) . Due to COVID restrictions it was a virtual hearing. A copy of the Court order can be accessed on the below link- https://smithandwilliamson.com/media/7967/court-order.pdf.
- With the Court’s approval, the return of Custody Assets will now be undertaken by way of a series of partial transfers to five regulated brokers. The JSAs are liaising with each of the Nominated Brokers and an indication of the timing of the upcoming transfers will be provided in their next communication to Clients. Gravitas has already communicated to the JSAs its choice of broker from the five regulated brokers.
- As per the JSAs, prior to any Client Assets being transferred to a new Nominated Broker, Clients will receive further notice from the JSAs and be provided with a Client Asset Return Statement via the portal and an explanation of their rights under the Distribution Plan. Gravitas now awaits this Notice from the JSAs to proceed further.
- The above Distribution Plan does not apply to Client Money held within the Client Money Pool (which crystallised on 8 October 2019 and is being returned by way of a separate distribution of Client Money, see below).
Distribution of Client Money held as at 8 October 2019
- The return of Client Money from the Client Money Pool (i.e. cash held as at 8 October 2019) does not form part of the Distribution Plan and the JSAs sought to return part of this cash to Clients by way of a Client Money distribution in accordance with the FCA’s Client Money Distribution and Transfer Rules (as set out in CASS 7A) during August 2020 (‘’the First Interim Distribution of client money’’)
- Gravitas received its ‘’First Interim Distribution of client money’’, being 80% of the cash held with Reyker as at 08 October 2019, in the first week of September 2020. This cash has already been applied to all relevant underlying clients’ accounts on the platform.
- The balance cash is now expected to be received once the transfer of custody assets is complete and maybe subject to costs as applicable.
Financial Services Compensation Scheme
- As previously reported by the JSAs, the costs of pursuing Objective 1 of the Special Administration (i.e. the return of Client Assets) are paid from Client Money and, therefore, Clients not eligible for or choosing not to claim FSCS compensation will receive a shortfall in the Client Money to which they lay claim following the deduction of their share of these costs.
- Gravitas has elected to claim FSCS compensation and its claim is currently under review by the FSCS. Please note that the JSAs have set up a dedicated website page to provide all updates to stakeholders, the link of which is provided below. We recommend that you consult the same.
https://smithandwilliamson.com/reyker-securities-plc. Gravitas has been and will remain in regular contact with the JSAs and will of course continue to keep you updated of all developments regarding the above.
Gravitas support team