WealthTek Limited Liability Partnership - Case Update

Shane Crooks, Kirsty McMahon and Emma Sayers, the joint special administrators of collapsed wealth management firm WealthTek, have made significant progress in their return of client assets.

We last wrote about WealthTek in October 2024, after the High Court released its reasons for approving a distribution plan proposed by the joint special administrators in respect of approximately £148 million in stocks, shares and other client assets. A key focus of the joint special administrators since that time has been the implementation of the distribution plan and the return of client assets and FSCS compensation. The joint special administrators have advised that client assets pertaining to 755 clients have now been returned, representing circa 81% of those clients with claims of over £1,000. The specific breakdown of assets returned is £80.4 million in securities and £1.4 million in client money.

The joint special administrators also discuss the significant £80.8 million shortfall in the client assets held by WealthTek — which is different from other investment bank special administrations that have occurred to date — sharing that the shortfall has highlighted a number of issues in relation to WealthTek’s books and records and had an impact on the speed and manner in which assets have been capable of being returned to clients.

The joint special administrators are also continuing to liaise with a number of SIPP providers to arrange appropriate mechanisms for the transfer of client assets held within SIPP wrappers. During the reporting period, a total of 139 SIPP accounts were been returned to clients.

In addition, the joint special administrators have continued to work closely with the FSCS regarding the compensation available for WealthTek clients. In September 2023, the FSCS confirmed that it anticipated that, for eligible clients, it was likely to meet any losses suffered (including the costs of returning money and transferring assets to a new broker) to a maximum amount of £85,000 per client. The joint special administrators have made three drawdown requests for funds from the FSCS under the terms of the compensation deed totalling £30.2 million (representing client compensation of £20.3 million and costs contributions of £9.9 million advanced by the FSCS on behalf of the 935 clients that have, to date, been determined as eligible). Of the £20.3 million received by way of client compensation, £19.2 million has been paid to clients.

The joint special administrators have not been able to advance any investigations, since the High Court previously rejected a provision for the costs of potential future investigations and litigation to recover shortfalls. No external or third-party funding has been received, and the joint special administrators have been required to pause their ongoing investigations.

Read the joint special administrators’ most recent report HERE. They have been assisted by Norton Rose Fulbright.