The FCA issued its notice against Hartmann on its website on Christmas Eve, citing “shortfalls” in the company’s client money accounts.
It stated that the company must cease conducting any business “that involves the carrying on of any regulated activities” – including initiating any new business – involving client money, except to allow for the settlement of certain transactions that were being settled at the time of the announcement.
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 £25m in client money, or around 6%, and that it also held “in the region of £36m” in custody assets.
The company told the FCA that it had sent instructions to a bank with which it was holding client money to withdraw approximately £100,000, in spite of the shortfall, “in order to pay its operating expenses”, but, according to the FCA's notice, the authority said it had ordered that instruction to be reversed, arguing that it would have caused the existing client money shortfall to have been worsened.
Hartmann executives were not immediately available for comment. However, a statement on Hartmann’s website dated 27 December said the company’s directors had applied to wind up the company.
Discretionary managed accounts
Hartmann provided a range of regulated services, including dealing as a principal and agent in options and commodity options, as well as discretionary managed accounts, to investors and institutions in the the UK market. ATSG Wealth Management, a London-based company which is active in the international marketing space, was its exclusive representative overseas.
John Ferguson, managing partner of ATSG, said his company had around 150 clients with Hartmann discretionary accounts, the majority of which held their investments in self-invested personal pensions and QROPS.
“We are informed at this stage that all monies are protected, and that clients are not likely to lose anything," Ferguson said.
"We have already completed diligence on a new discretionary manager, and it is now a matter of waiting for the FCA to allow Hartmann to transfer client funds."
Ferguson said ATSG had issued a statement to its brokers, and that “they have been asked to inform all their clients that this process could take several months".
It was not immediately known how long Hartmann Capital has been in business, but according to a London Stock Exchange announcement on 30 December 2011, "Hartmann Capital" was the new name for a company previously known as Lewis Charles Securities.
According to published reports, Hartmann was about to launch a structured product, and last year had hired David Stuff, who had been involved in establishing Barclays' structured products business, as its new managing director of structured products.
Hartmann is headed up by Andrew Fitton, its chief executive and acting chairman since January 2011. Fitton, who is Hartmann's largest single shareholder, is also a founding partner of Gracchi Capital Partners, a hedge fund company specialising in derivative and "volatile" strategies, according to a biography on the Hartmann Capital website.
Other top executives at Hartmann include Adam Tash, deputy chief executive; Sean Downey, chief operating officer; and Mike Paddon, compliance director.
