The Financial Conduct Authority (FCA) said it is conducting a regulatory and criminal investigation into both discretionary fund manager (DFM) WealthTek and its principal partner John Dance.
The UK watchdog said this will look into “potential regulatory breaches relating to client money and custody assets, and criminal offences of fraud and money laundering”.
This comes weeks after the FCA ordered WealthTek to immediately cease all regulated activities due to “serious regulatory and operational issues coming to light”.
WealthTek is an FCA-authorised and regulated wealth management firm which provided discretionary, advisory and execution only services to their retail clients and intermediaries. However, as reflected on the FCA register, it did not have permission to hold client money or custody assets.
Asset freeze and arrest
During an FCA update on 31 May 2023, the regulator confirmed that it obtained a worldwide order to freeze assets belonging to Dance up to the value of £40m ($49m, €46m).
The UK regulator said: “The aim of this action is to preserve assets which may potentially be available for distribution or confiscation upon the conclusion of any civil or criminal proceedings brought by the FCA.
“The FCA considers it important to note that whilst this order restrains and prevents Mr Dance from dissipating any of his identified assets, it does not preclude him from claiming reasonable living expenses or from continuing to operate his horse business or any other existing business unrelated to the matters featured in the proceedings brought by the FCA to date.”
Dance was arrested on 4 April 2023 by Northumbria Police in connection with the FCA’s investigation and the FCA later interviewed Dance under caution.
Shortfall
On 6 April 2023, the FCA sought to protect customer assets in WealthTek by instigating an insolvency procedure and securing High Court approval on 6 April to put the firm in special administration.
The High Court appointed Shane Crooks, Mark Shaw and Emma Sayers of BDO LLP as joint special administrators of WealthTek, which also has the trading names Vertem Asset Management and Malloch Melville.
The FCA said is working closely with the joint special administrators and is “aware of the potential shortfall of £81.4m in client assets and money associated with WealthTek as at 6 April 2023”, it said.
The regulator added: “Further investigations are needed to establish the full picture and we will work closely with them to do all we can to reduce the harm to consumers.”
