SVS Securities - shut down?

masonic

My2penneth wrote: »

In the document from Leonard Curtis it gives one the impression that after they've reconciled what shares are in the pool and taken their fees , they will then return assets.

It seems to me that they could sell our shareholdings at what might be a very inopportune time st the end of September start of October with no deal Brexit on the cards.

It would be better if they transferred shareholdings into another platform say with iWeb or the share centre like they did with Beaufort Securities clients.

Their primary objective will be to rescue the business as a going concern and sell it to another broker. If that objective cannot be achieved, then yes, assets would be liquidated in order to make a distribution to investors. They could, at their discretion and providing the accounts all fully reconcile, allow investors to withdraw stock in certificate form, likely for a fee per holding - this would incur additional administration costs and might not be in the interests of creditors.

My2penneth

So, there's a risk that shares could be sold at the current market price and we end up with a cheque and a significant "difference" in what we paid for our shares and what we receive. This difference, would not be covered by the FSCS I'm guessing?

So much for a compensation scheme if this were to be the case as it would affect all shareholders regardless of their investment level.

My2penneth

In the case of Beaufort Securities they transferred shareholdings to The Share Centre. I started to look at the resolution of the case. They give examples of clients "A to G" , each shareholders with different sums of money invested.

Customer G ( high roller!) with £1.6m in cash + shares (in total ) would lose out to the tune of a £20k loss. Note...since the compensation limits increased in April 2019, nowadays even G would not lose money.

beaufort/costs-and-cost-allocation-paper.pdf

(Put the text line into Google as I'm not allowed to post links and look for a pdf file under from PwC)

Since broker platforms are keen to get more customers ( assets under management) then I dont really see a hurdle in transferring shares from SVS to another platform as what happened with Beaufort clients.

Malthusian

My2penneth wrote: »

So, there's a risk that shares could be sold at the current market price and we end up with a cheque and a significant "difference" in what we paid for our shares and what we receive. This difference, would not be covered by the FSCS I'm guessing?

Most definitely not. There's nothing stopping you from repurchasing the shares with your cheque, so no loss has occurred.

Except, of course, for time out of the market. But that has as much chance of benefiting you as costing you. Plus additional dealing costs which should be marginal.

Aretnap

My2penneth wrote: »

So, there's a risk that shares could be sold at the current market price and we end up with a cheque and a significant "difference" in what we paid for our shares and what we receive. This difference, would not be covered by the FSCS I'm guessing?

So much for a compensation scheme if this were to be the case as it would affect all shareholders regardless of their investment level.

If they did happen and you were paid the market value of your shares at the time of the sake then there would be no loss to compensated for - the difference between what you paid for the shares and what they were ultimately sold for is normal investment risk and if you still wanted to hold the shares you could buy them back immediately through another broker. In theory this would be at the same price - your only losses would be dealing fees.

In practice of course there might be a delay between the shares getting sold and you getting the proceeds, and that could mean having to buy them back at a different price (higher or lower), especially if the market was volatile at the time. However I doubt whether this is something you could claim for - it feels more like luck of the draw as it could just as easily work to your advantage. I mean, if the administrators sold your shares just before the price dropped, and by the time you got the cheque you were able to buy them back at a much lower price, would you donate your gains to the FSCS to compensate other less lucky investors whose shares had gained value in the same period?

(Added: Malthusian tours faster than me, and is more concise)

masonic

My2penneth wrote: »

Since broker platforms are keen to get more customers ( assets under management) then I dont really see a hurdle in transferring shares from SVS to another platform as what happened with Beaufort clients.

There will be a hurdle if the books don't balance, in which case some of the shares to be transferred might not exist. There's no reason to think such a scenario will come to pass at this stage.

[Deleted User]

SVS seems to have acted as broker to African mining companies, similar to Beaufort.

https://citywire.co.uk/new-model-adviser/news/mining-firms-scramble-for-brokers-after-svs-collapse-shocks-aim/a1257184

NorthBryan

Afternoon, Sorry I'm sure it will be ok but new to shares etc. I moved 15k of shares via my share cert into the SVS account back end of last year. The share cert is in my name. Will I just get that back now SVS securities has gone into administration?


thank you in advance.


Bryan

LEAR1

Many thanks for all of the useful information / experiences shared by others - especially masonic and my2penneth.

I have only stumbled on this thread following an alert from a fellow stockopedia user. Having read the comments by many who were as clueless as I was a few days ago on administration processes, I thought I'd share for the benefit of others the following summary feedback I received first-hand from an individual who sits on the Beaufort Creditors and Clients' Committee who was kind enough to answer my questions late last night. (NB some repetition of things that have been posted on this thread already.)

1. FSCS compensation (limit 85k for individuals / 170k for joint accounts) relates to loses

This is more of a clarification than anything else, but I was confused, so perhaps worthwhile repeating here for others. If, as should be the case, client assets are properly ring-fenced in the nominee accounts and can be readily reconciled with us PIs as the ultimate (beneficial) owners according to the company’s records, then our loses should be limited to just the fees/cost of the administrators (less any residual assets of SVS that might be available in the first instance). Even for investors with more than 85k in shares / cash with SVS, there would need to have been major systemic fraud / negligence on the part of SVS [NB – NO IMPLICATION INTENDED HERE / HYPOTECTIALLY SPEAKING ONLY], and in all likelihood very substantial fees to be settled with the administrators, for the compensation limit to be insufficient. Otherwise, the compensation would ‘make good’ any reconciliation shortfalls as well as each PI’s share of the administrator’s costs.

In the case of such reconciliation shortfalls with BS, the date of administration was used as valuation date for ‘missing stocks’. NB my source gave me the impression this was quite a small issue in practice, so no need to worry about this unduly and/or reason to think it will be any different in the present instance.

2. In BS case, the £10k fee for each PI for their share of the administrator’s work was paid by the FSCS directly to PWC with PIs not needing to do anything (rather than it being taken from client assets and the FSCS then having to deal with all of the PIs’ comp claims)

3. Execution-only investments are definitely covered; like another poster, I had originally stumbled over a link suggesting FSCS comp was only applicable to investments procured following ‘advice’ from a regulated firm (that link was intended to deal with situations where a firm offers an investment product like an endowment or bond)

4. PIs are eligible for FSCS comp irrespective of their personal location. I’m Jersey based, and my source told me that in the case of BS there are several Australian clients who are covered. The important qualifier is that the subject firm (SVS in this instance) has FCA / PRA regulation.

Hope that helps some others. As I said, points above are not my experience, but the kind feedback from someone very much in the know with the BS events. It certainly helped put my mind at rest once I had been informed hence the desire to share it here ...

Thrugelmir

Deleted_User wrote: »

Nevertheless, platform failures are a reality and not something which ordinary investors can totally guard against.

There's plenty of information out in the public domain. Learn to read the Company accounts as a starter. Secondly understand the business model. As they do differ.