The £23.7m is slightly more than the £23.5m it was revealed to have at the end of December, but not the full £25m it was supposed to have had at that point.
The data was contained in an 88-page proposal sent out on Monday by UHY Hacker Young special administrator Peter Kubik to all known clients and creditors of Hartmann, to update them on the status of the Hartmann administration and to provide a basis for a client and creditors’ meeting next month.
The meeting is set for 13 March in London.
Commenting on the sums uncovered, the administrators said: "It is expected that there will be a shortfall in client monies. This shortfall cannot be calculated with precision until such time as all client claims are approved and costs allocated."
Clients, they added, will soon be given a chance to have their equities returned to them or transferred to their broker of choice, while client monies will be distributed only after agreement has been reached of all client claims to them.
An interim distribution could be possible, at the discretion of the special administrators, and if it were to happen, it would take place before 31 March, the joint special administrators' statement noted.
As reported, Hartmann Capital, a London-based investment firm and discretionary accounts manager, the products of which have been sold by Europe-based financial advisers, is being wound up in the wake of a Financial Conduct Authority “supervisory notice” against it.
The FCA issued its notice against Hartmann on its website on Christmas Eve, citing “shortfalls” in the company’s client money accounts.
According to the FCA’s notice, the shortfalls were brought to the authority’s attention on 19 December by Hartmann, which said it had a £1.5m shortfall out of its holding of around £25m in client money, or around 6%, and that it also held “in the region of £36m” in custody assets.
The document released on Monday by the special administrators provides a few more details than heretofore have been given about the sequence of events that led to the FCA's action on 24 December. It notes that on Sunday, 15 December, "following the discovery of a suspected substantial shortfall in client monies, the company's directors (other than Andrew Fitton) took the decision, based on legal advice, to suspend Mr Fitton from his role as chief executive officer…pending the outcome of an investigation by the chief operating officer". The reason for the £1.5m shortfall, however, is not given.
Holdings mainly in British sterling
Of the client monies the Hartmann administrators found, the largest share, or £21.6m worth, was held in sterling, with US dollar assets the next largest percentage, totalling £1.33m worth ($$2.2m), the report issued on Monday reveals.
The remainder of the amount was held in a variety of currencies, including euros, Hong Kong, Canadian and Australian dollars, Japanese yen and Norwegian kroner, revealing the international nature of its sales.
A partner in the law firm which is advising the special administrators of Hartmann Capital admitted that it is “possible” clients in the beleaguered‚ London-based investment company “may lose money”‚ once the process of administration is over.
Talk of sale
On 16 January, as reported, the joint special administrators released a statement in which they said they were “in discussions regarding a potential sale of certain aspects of the company”. The statement, which was addressed “to all known clients” and posted on the company’s website, gave no details about the possible sale.
Today, James Moore, an associate at Bird & Bird, the law firm which has been advising the special administrators on the Hartmann case, said the possible sale at this point is actually “four separate sales of different divisions of the business”, and “heads of terms have been agreed”.
However, because the sales would involve the movement of client assets and monies, “nothing can be done until the procedures set out in Monday’s proposal have been followed, the reconciliation process has concluded and client consent, if it is to be given, has been obtained”, Moore added.
Until the end of 2011, Hartmann Capital was known as Lewis Charles Securities, although it was founded in 2000 as SFS International Securities, and became Lewis Charles in 2005.
