WealthTek updates

Statement 16 October 2024  

Distribution update 

We are pleased to confirm that the Joint Special Administrators (‘JSAs or BDO’), have now proposed the date of distribution as 19 November 2024. Subject to the necessary parties being in position to commence, this is the date when client assets can be transferred, for FSCS eligible claimants, to Third Platform Services (‘TPS’), our nominated broker.  

BDO, have confirmed that they will shortly be writing to clients who hold a General Investment Account (‘GIA’) and/or Individual Savings Account (‘ISA’) to confirm the proposed date of distribution. 

As WealthTek LLP (‘WealthTek’) are defined as the ISA Manager, an ISA notification will be provided to ISA account holders. Under the ISA regulations, the ISA manager must offer no less than 30 days’ notice to inform clients that WealthTek will cease to be ISA manager. The notice will also confirm that TPS, who are authorised and regulated by the FCA (‘Financial Conduct Authority’), will act as ISA Manager for the Stellar AIM IHT Service, when the assets have been transferred. 

You do not need to take any action in response to the letters being sent by BDO. We have undertaken all the necessary arrangements to ensure your assets can be transferred to our nominated broker, and we will write to you again prior to the transfer date with further information on how to access your investments after the transfer. 

Court update 

As you will be aware, in relation to WealthTek, on 23 July 2024 the Distribution Plan was approved. However, Justice Rajah requested further submissions in relation to the cost reserve for potential litigation. 

On 4 October 2024 Justice Rajah handed down his judgement. This can be accessed by the following link. https://www.stellar-am.com/docs/approved-judgement-4-october-2024/ 

A summary of the key points are as follows: 

• The Distribution Plan remains approved and is unaffected by this judgement.  

• There will be a reduction in the costs contribution because of the Judge’s decision on the element that related to the litigation cost reserve. We do not believe that this will impact any of our clients. 

The JSAs have confirmed that an updated Client Asset Confirmation Statements (‘CACS’) will be reissued to all clients prior to the distribution date. The updated CACS will reflect all corporate actions, including dividends up to 31 August 2024. This will also reflect any reduction in cost contribution.  

Following the distribution of the CACS to the 30 June 2024, we were pleased to note that the data BDO provided reconciled with our own calculation. We will, of course, undertake further reconciliations on the updated CACS when they are distributed. 

If you have any questions or require assistance, please e-mail us at enquiries@stellar-am.com or call us on 020 3195 3500. 

 For further information please visit 

 Stellar  

https://www.stellar-am.com/wealthtek/
 

BDO 

https://www.bdo.co.uk/en-gb/insights/advisory/business-restructuring/wealthtek-administration 

Statement 13 September 2024

We have been advised by BDO, the Joint Special Administrators (‘JSAs’), that all WealthTek LLP (‘WealthTek’) clients have now been issued with an updated Client Assets Confirmation Statements (‘CACS’). The CACS have been sent to each client’s registered email address with the JSAs, if they have one, or mailed to their postal address as a hardcopy. The CACS will show the position of your investment as of 30 June 2024.

Stellar Asset Management Limited (‘Stellar’) intends to undertake a detailed review of the CACS on behalf of our clients, to ensure they accurately reflect the holdings and cash as per our records.

Clients are not required to act at this time but may wish to review the CACS provided.

Any further movements to client positions from 30 June 2024 until the date of transfer to our new custodian, will be noted and a further adjustment to clients’ records will be undertaken once the asset transfer has been completed. We will liaise with the JSAs and advise of the timing of these residual sums.

If clients do have any queries with regards to the figures in the CACS, then we would ask that they first contact Stellar directly on 020 3195 3500 or by email at enquiries@stellar-am.com

New Custodian

As noted in our prior communications, Stellar Client Assets will transfer directly from BDO to our new custodian Third Platform Services (‘TPS’), part of Third Financial group. TPS is authorised and regulated by the FCA (‘Financial Conduct Authority’) and act as Custodian, Administrator, and ISA Manager for the Stellar AIM IHT Service.

Next steps

We will provide a further update when BDO offer more clarity on when the repatriation of your assets to TPS will commence.

In the meantime, if you have any queries, please contact us on 020 3195 3500 or enquiries@stellar-am.com

We would also like to take this opportunity to thank you once again for your patience throughout this process.

For further information please visit

Stellar

https://www.stellar-am.com/wealthtek/

BDO

https://www.bdo.co.uk/en-gb/insights/advisory/business-restructuring/wealthtek-administration

Statement 25 July 2024  

Following the court hearing held on Tuesday, the JSAs (Joint Special Administrators) BDO, have confirmed that the Distribution Plan (DP) has now been approved. The approval is subject to further guidance from the court on “Costs Contribution” (as defined in the DP). However, BDO has advised that this will not hold up the work to facilitate the return of Client Assets. 

This is positive news and a key stage in returning assets to investors. We will continue to work with BDO to move assets to our new custodian as quickly and efficiently as possible.

Our new Custodian 
We have appointed Third Platform Services (TPS), part of Third Financial group, as our new custodian. TPS offers an excellent service and platform with one of its fundamental offers being a segregated client asset and client money mandate.  

This is different from what is generally available on the market and means that all Stellar AIM IHT Portfolio securities and cash will be held in separate, dedicated accounts and will not be “pooled” or “mingled” with other TPS clients.   

TPS is authorised and regulated by the FCA (Financial Conduct Authority) and makes available to us its external regulatory client assets and securities audit.  

Other customers of TPS include Schroders, Arbuthnot Latham, Marsh & McLennan, and Slater Investments, plus other AIM IHT managers such as Downing LLP and Whitman Asset Management. 

Further information on TPS is available on request

Next steps 
We will offer a further update when information, specifically in relation to the timeline for repatriation of your assets to TPS, become clearer now that the DP has been approved. 

In the meantime, if you have any queries, please contact us on 020 3195 3500 or enquiries@stellar-am.com.  

We would also like to take this opportunity to thank you once again for your patience throughout this process.

Website:
https://www.bdo.co.uk/en-gb/insights/advisory/business-restructuring/wealthtek-administration 

Statement 14 June 2024 

The JSAs have now confirmed that that the Distribution Plan Application has been relisted to be heard at 10:30am on Tuesday 23 July 2024.  

Website:
https://www.bdo.co.uk/en-gb/insights/advisory/business-restructuring/wealthtek-administration 

We will continue to update you when further information is available. 

Statement 3 June 2024 

The JSAs’ Distribution Plan application is listed to be heard on Friday 7 June 2024 at 10.30am in person before Mr Justice Rajah in the High Court of Justice, Business and Property Courts of England and Wales, 7 Rolls Building, Fetter Lane, London EC4A 1NL. The court room number will be available on the online cause list the afternoon before the hearing and also displayed in the lobby of the Rolls Building at the same address on the day of the hearing.

As previously confirmed, clients are not required to attend the Court hearing. However, the Court hearing will be held in public and anyone is able to attend, if they wish to do so. Any person intending to participate in the Court hearing should contact the JSAs as soon as possible.

Statement 3 May 2024 

Further to our last update on 18 March 2024, the Clients’ and Creditors’ Committee (CCC) met yesterday and approved the Distribution Plan that will now be lodged at court next week, with a court date set for 7 June 2024.

The Distribution Plan and accompanying Explanatory Statement applies to all Client Assets and will be circulated by BDO once lodged at court. These documents will also be available via our dedicated WealthTek updates page in the Documents section here. This provides all the latest updates in relation to WealthTek LLP (WealthTek) as well as FAQs.

BDO advise that later today it will publish its latest six-monthly update through its usual channels. Copies will also be available from our website as noted above.

If investors do have any queries, then we would ask that they first contact us directly on 020 3195 3500 or by email at enquiries@stellar-am.com.

For further information or if you would prefer to contact BDO directly, then details are as follows:

Website:

https://www.bdo.co.uk/en-gb/insights/advisory/business-restructuring/wealthtek-administration

Postal address:

WealthTek Team

BDO LLP

Business Restructuring

5 Temple Square, Temple Street

Liverpool, L2 5RH

Telephone:

+44 (0)113 521 4470 or +44 (0)151 351 4700

Email:

Wealthtekclients@bdo.co.uk or WealthTek@bdo.co.uk

Statement 13 February 2024 

I am pleased to be able to write to you following receipt of your Stellar AIM IHT Portfolio statement from the Joint Special Administrators (JSAs or BDO). 

As an investor myself, together with my wife and my family, I fully understand the relief that you must feel following confirmation that the overwhelming majority of our assets were untouched. 

This has been an extremely challenging time for everyone. The shortfall within WealthTek of £70m (out of total assets of £ 215m) plus a further £10m of missing cash came as a huge shock. 

We would like to thank the relevant authorities as they continue their efforts in bring the person(s) who perpetrated this fraudulent activity to account.

Our focus, priorities, and next steps  

For now, our focus is to provide you with access to your portfolios as soon as is practically possible. 

In order for this to happen, the Court will need to approve the recommended distribution plan. While we cannot predict the timing of this approval, we hope that this can be achieved by 30 April 2024 based on the JSAs discussions to date. 

Once approved, we can instruct the broker to be appointed by the JSAs to handle client holdings to move these holdings to our new custodian and administrator (see later for further information). 

As soon as that is complete your portfolio will become visible and valuations and other reports will be available on the Stellar portal. 

If all goes to plan, your cash will be made whole to the value in your portfolio as at 6 April 2023 (being the date the appointment of the JSAs). 

Our position 

When the JSAs were appointed, our assets which were held by WealthTek totalled £34.3m; following the investigations by the JSAs, our share of the total asset shortfall was £1.7m. Of this sum, just £0.16m related to AIM securities and the balance to cash holdings. 

I am sure that you, like us, will welcome the news that only a very small part of the overall WealthTek shortfall relates to our assets. 

As an organisation, we were happy that our systems and controls, which involved daily reconciliations, provided us with a large degree of protection over the losses that we have suffered. 

To have our rigorous due diligence process and those internal controls validated, is testament to the hard work of the team at Stellar. 

During this difficult time, we have sought to stand by our values, particularly those around transparency and understanding. We have communicated with you all on a regular basis despite there being limited news on many occasions whilst the JSAs work continued. 

Our team has worked tirelessly in the background with the JSAs, and I hold a place on the Clients’ and Creditors’ Committee to help drive a positive and timely outcome for all clients. We have also been working with our regulator, the FCA, to support the investigation into how this situation arose at WealthTek.  

Small shortfall on client assets and client monies and FSCS commitment 

We are all now aware of the very small shortfall on our clients’ AIM assets.  

Our proportion of the shortfall in all clients’ cash holdings of £10m is shared across all WealthTek clients and this is expected to recoup 19p in every pound. 

As previously announced, the Financial Services Compensation Scheme (FSCS) will be covering these shortfalls in full in cash. The following was taken from the FSCS announcement on 14 September 2023. 

“We now anticipate that, for customers who are eligible under FSCS rules, we are likely to meet any losses suffered in relation to the following; 

• the costs of returning client money to the customer and; 
• the costs of transferring any assets to a new broker – provided the particular assets are covered by FSCS’s rules. 
• client money shortfalls, that have occurred as a result of WealthTek not holding all the client money that it had undertaken to hold for that customer; and 
• client asset shortfalls that have occurred as a result of WealthTek not holding the client assets it had undertaken to hold for that customer. 

Further information regarding eligibility for FSCS compensation can be found here: 

https://www.fscs.org.uk/making-a-claim/claims-process/eligibility-rules/” 

The small number of missing shares will be made good in cash to their value as at 6 April 2023. 

The cash shortfall should also be made whole to your cash holding in your portfolio as at 6 April 2023 (subject to FSCS rules). 

Portfolio Performance  

As all our clients continued to hold over 99% of their holdings in AIM companies which the JSAs have been able to reconcile; our clients will benefit from the performance of those holdings since 6 April 2023.  

The portfolio, as constructed and managed by our in-house team, has continued to outperform the market (and the overwhelming majority of its peers). Client portfolios following the model as at 6 April 2023 have increased, on average, by +6.0%* prior to the inclusion of dividend entitlements or deduction of fees. 

This compares to the FTSE AIM All-Share Total Return index which fell by -4.4%* and our benchmark, Numis Alternative Markets (ex. Inv. Companies) Total Return index, which fell by -5.2%*.

*Performance calculated from 6 April 2023 to 31 January 2024 

 Our new Custodian 

We have appointed Third Platform Services (TPS), part of Third Financial group, as our new custodian. TPS offers an excellent service and platform with one of its fundamental offers being a segregated client asset and client money mandate. 

This is different from what is generally available on the market and means that all Stellar AIM IHT Portfolio securities and cash will be held in separate, dedicated accounts and will not be “pooled” or “mingled” with other TPS clients.  

TPS is authorised and regulated by the FCA and makes available to us its external regulatory client assets and securities audit. 

Other customers of TPS include Schroders, Arbuthnot Latham, Marsh & McLennan, and Slater Investments, plus other AIM IHT managers such as Downing LLP and Whitman Asset Management.

Further information on TPS is available on request. 

Conclusion 

I hope this update addresses any questions you may have. As ever, should you need to know more please do not hesitate to ask. 

You can contact us on 020 3195 3500 or enquiries@stellar-am.com.  

We will write again once we know details of the court date mentioned above when we anticipate providing you with a clearer date for the repatriation of your assets. 

We would also like to take this opportunity to thank you once again for your patience throughout this process. 

Yours sincerely

Jonathan Gain

Chief Executive

Statement 25 January 2024 

Further to our most recent statement of 18 December 2023, we were advised on 24 January 2024 that BDO, the Joint Special Administrators (JSAs), will unfortunately not be able to meet their proposed deadline to send out Client Asset Statements before the end of January. However, the JSAs have now advised us that Client Asset Statements will be circulated within the next two weeks. 

The JSAs have also confirmed that whilst the drafting of the Distribution Plan has been substantively progressed, several issues remain outstanding, and they will not be able to make the application to the court at the same time as the Client Assets Statements are released. A further update on the timing of the application will follow from the JSAs in due course.  

We understand that this further delay comes as a disappointment to us all, but please be assured that the JSAs are working hard to ensure an effective distribution of the assets as soon as possible. 

We will continue to provide updates to clients, in relation to communications the JSAs will circulate, as soon as further information is provided by the JSAs. 

Statement 24 November 2023 

On 23 November 2023, the Joint Special Administrators (JSAs) provided an update to us stating that it will send a letter to all clients this week requesting that all clients provide the JSAs with an email address that they wish to be linked to their account(s). The email addresses are required to allow the JSAs to provide each client with unique access to their documents, such as the Client Asset Statements.   

The next Client Asset statement to be sent in the coming weeks will confirm the assets that the JSAs have found and therefore attributable to each client. This is consistent with the update we posted on 6 November 2023 following the JSAs last report. 

Clients are encouraged to provide an email address to the JSA’s, and this can be actioned by completing the link provided in the letter. If you do not have an email address, please contact the JSAs directly on wealthtekclients@bdo.co.uk ,0113 521 4470 or 0151 351 4700.

Statement 6 November 2023 

On Friday afternoon 3 November 2023, the JSAs distributed its second progress report covering the period to 5 October 2023. 

There was little “new” news in this report and the principal observations we make to you are as follows: 

• There is a slight decrease in the shortfall identified. However, it remains a substantial amount. 
• The FSCS confirmed that it anticipates that, for eligible customers, it is likely to meet any losses suffered in relation to the following:  
  • the costs of returning Client Money;
  • the costs of transferring any Custody Assets to a new broker (provided that the assets are covered by the FSCS’s rules);
  • shortfalls suffered on any Client Money claim; and
  • shortfalls suffered an any Custody Asset claim.

• The custodian CACEIS has confirmed it is holding c£96m – this substantially exceeds the amount we expect them to be holding on your behalf. 

• The costs of JSAs work is substantial and now amounts to almost £1.6m and a further £0.9m of costs of which half are legal costs. 
• The distribution plan is to come forward shortly albeit later than envisaged at last Client and Creditor Committee meeting. We hope this is proposed and agreed in the coming weeks. 
• Client statements will be sent out once the distribution plan is approved. 

There is no need for any client or adviser to take action from this report and we will update you following the next Client and Creditor Meeting which we anticipate will be held in November 2023. 

View the full progress report here.

Statement 8 September 2023

The first meeting of the WealthTek LLP (WealthTek) Clients’ and Creditors’ Committee (CCC) was held with BDO, the administrator, late Wednesday 6 September 2023.

The meeting covered a lot of ground, and we were updated on progress and likely next steps. We are now able to confirm the following.

1. A statement from the Financial Services Compensation Scheme (FSCS), regarding WealthTek customers, will be made next week.
2. BDO will set out its proposed timetable for next steps, including its distribution plan, next week.
3. BDO will, in addition, prepare its next report on 5 October 2023 to all clients and creditors. This will be circulated within 30 days i.e., by 5 November 2023.

We will post statements from both the FSCS and BDO, as soon as they are available, on this page.

We will also provide a summary of the implications for clients by the end of next week – 15 September 2023.

Statement 15 June 2023

The Joint Special Administrators’ (JSAs’) Initial Meeting was held at 14:00 on 14 June 2023 at The Met Hotel, King Street, Leeds, LS1 2HQ.

We want to offer our sincere thanks to those who were able to return a Client Statement of Claim, a Client Proxy, and a Creditors’ and Clients’ Committee Nomination form. This was very much appreciated, and well received considering the short turnaround time afforded to us all by the JSAs.

Our priority remains to work closely with the JSAs to ascertain the security of client assets and seek to achieve the management of relevant accounts as soon as possible. We are grateful for your patience as this work is ongoing, and we will continue to provide you with regular updates as matters progress.

A full recording of the meeting and a transcript of the Q&A session will be provided by the JSAs, and we will make this available via our website following its publication.

Until then, we would like to provide you with an update following the initial meeting with the JSAs. A summary of the key points is detailed below:

• Stellar Asset Management’s clients were represented in person at the meeting by our Chairman, our CEO, and two colleagues from the AIM IHT service management team.
• As a result of the volume of proxy votes, we were able to ensure the proposals that were put to the meeting were passed, and these votes were also sufficient for our CEO, Jonathan Gain, to obtain a seat on the Clients’ and Creditors’ Committee (CCC).
• The CCC consists of five members. The Financial Services Compensation Scheme (FSCS) were one of the other four members voted onto the CCC.
• The meeting was largely dedicated to outlining the process of the Special Administration, both in terms of what has been achieved and what is to come.
• Further reconciliation work has been completed but much remains to be finalised, so the outcome remains largely as it was in the JSA’s report published 30 May 2023.
• Some 40 people attended the meeting in-person. The JSAs took a number of questions from attendees during the meeting. One key request from the attendees and our team, was whether the JSAs had information in respect of the specific asset types that have been found and reconciled. We were assured that this process was being treated as a priority, though the JSAs were not able to provide the meeting with an estimated timescale.
• A representative from the FSCS confirmed that he expects the FSCS Compensation Scheme to be accessible by WealthTek clients who meet the eligibility criteria, but they stated that they are not able to provide further detail while the JSAs’ initial reconciliation is ongoing.
• We will continue to work in any appropriate way with the JSAs to assist in their completion of the reconciliation, and we await confirmation of the first CCC meeting.
• It is worth noting that the CCC meetings will be protected by additional confidentiality provisions and therefore further updates will need to be agreed with the committee and the JSAs to ensure that these provisions are met.

Statement 9 May 2023

From 10 May 2023, all users will lose access to the WealthTek portal because of a certificate expiry, the renewal of which is outside our control.

Client valuations to 31 December 2022 are available from the portal at www.stellar-am.com.

Any other historical documents, if available, can be requested via enquiries@stellar-am.com.

Valuations

Client valuations to 31 December 2022 are available from the portal at www.stellar-am.com.

We no longer have access to online valuations whilst the JSAs perform their work and, from 10 May 2023, all users will lose access to the WealthTek portal.

Until this is complete no further valuations will be issued and tax statements for the year to 5 April 2023 will follow as soon as we are able.

Statement 17 April 2023

Since our last communication on 6 April 2023, we can report the following.

Special Administration

With effect from 6 April 2023, WealthTek, also trading under the names Vertem Asset Management and Malloch Melville, was placed into Special Administration following an application to the High Court by the Financial Conduct Authority (“FCA”).

Shane Crooks, Mark Shaw and Emma Sayers, licensed insolvency practitioners from BDO LLP, have been appointed as Joint Special Administrators (the “JSAs”).

The JSAs are now responsible for the affairs of WealthTek.

WealthTek remains regulated by the FCA, albeit certain restrictions are now in place to prevent the LLP (including under its other trading names) from undertaking any regulated activities.

The JSAs are working closely with the FCA as they carry out their duties.

Management fees

Whilst the portfolios are frozen, Stellar will not be charging any management fees.

In addition, Stellar has not been paid management fees since 1 January 2023. These are normally paid quarterly in arrears.

Adviser charging

Whilst the portfolios are frozen, we are unable to levy any ongoing adviser charges.

All ongoing adviser charges have been paid until 31 December 2022 and we are unable to collect ongoing adviser charges on your behalf whilst the portfolios are frozen.

Valuations

Client valuations to 31 December 2022 are available from the portal at www.stellar-am.com.

We no longer have access to online valuations whilst the JSAs perform their work.

Until this is complete no valuations will be issued and tax statements for the year to 5 April 2023 will follow as soon as we are able.

Communications

We remain in dialogue with both the JSAs and the FCA and supporting them both in their work.

We have produced a Q&A document which is available here, based on the information known at this date. We will update this with further information when it becomes available.

We intend to update this webpage weekly and we will notify you by email when an update is posted.

Statement 11 April 2023

Late afternoon, 5 April 2023, Stellar Asset Management Limited (“SAM”) was informed by BDO LLP, 55 Baker Street, London W1U 7EU that members of its firm had been appointed as joint Interim Managers (“the JIMs”) of WealthTek LLP, pursuant to Regulation 7(1)(d) of the Investment Bank Special Administration Regulations 2011.

WealthTek LLP (“the LLP”) was appointed by SAM to act as custodian and to provide related services for clients in relation to our AIM IHT Portfolio Service.

We have been advised by the JIMs that whilst under the management and control of the JIMs, the LLP will cease all regulated activity.

We understand that pending the outcome of a hearing between the LLP and the FCA, clients can still access the client portal to view their investments.

We have been advised by the JIMs that following the cessation of regulated activity, no trading can take place on any of the accounts, including purchases, sales, top-ups, or withdrawals.

On 6 April 2023, the following was published by the FCA.

“The FCA has taken urgent steps with the High Court to successfully appoint Interim Managers (the High Court appointed Shane Crooks, Mark Shaw and Emma Sayers of BDO LLP) to take control of WealthTek Limited Liability Partnership (WealthTek), which also has the trading names Vertem Asset Management and Malloch Melville.

The FCA has also ordered the firm to immediately cease carrying on all regulated activities, following serious regulatory and operational issues coming to light.

The appointment of BDO LLP is interim pending a further court hearing.

Northumbria Police, working in partnership with the FCA, arrested a man aged 48 in connection with these concerns and the FCA later interviewed the individual under caution.

WealthTek is an FCA authorised and regulated wealth management firm which provides discretionary, advisory and execution only services to their retail clients.

The FCA is in close contact with the firm and the interim managers regarding the fair treatment of customers and further information will be made available by them in due course.”

We apologise for the disruption and uncertainty caused by this announcement. We are urgently seeking further information from both the JIMs and the FCA.

Our priority is to work with the JIMs to ascertain the security of all client assets and ensure that management of the accounts can be re-established as soon as possible. We will ensure that we update all concerned parties as soon as we are able.

We will hold regular updates for all advisers and their investors and will provide details of how to access these as soon as possible.

If you have any queries, please contact us at enquiries@stellar-am.com or call
us on 0203 195 3500.