SVS Securities - shut down?

masonic

NorthBryan wrote: »

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?

The only way you'd just get back your share certificate is if it had not been processed yet - unlikely if this was over 6 months ago. So you will be in the same boat as other clients - most likely you'll either soon be a client of another company, or you'll receive proceeds from the sale of your shares, possibly with a top up from the FSCS if the full value of those shares cannot be distributed to you.

pafpcg

masonic wrote: »

... or you'll receive proceeds from the sale of your shares ....

I really hope not! Turning my entire holding in Scottish Mortgage shares (bought 26 years ago) into cash in a single tax year would take me way over my CGT threshold.....

System

pafpcg wrote: »

I really hope not! Turning my entire holding in Scottish Mortgage shares (bought 26 years ago) into cash in a single tax year would take me way over my CGT threshold.....

Not if you reinvest in Scottish Mortgage shares within 30 days of the sale.

masonic

Economic wrote: »

Not if you reinvest in Scottish Mortgage shares within 30 days of the sale.

The situation could get interesting if there is a delay between the disposal and distribution of the proceeds of the sale. That would be a question to pose of the administrators so that they could answer in a forthcoming FAQ.

Alexland

masonic wrote: »

The situation could get interesting if there is a delay between the disposal and distribution of the proceeds of the sale. That would be a question to pose of the administrators so that they could answer in a forthcoming FAQ.

13,500 clients at a per customer value of at least £100 each (if you consider the circa £100 to £500 cashback you can get to open or transfer an investment account) would be an asset worth at least £1.35m. If the client assets are still safe then their accounts will surely be transferred (sold) to another platform. Probably one that does not have the lowest charges so they can recover the customer acquisition cost.

Alex

masonic

Alexland wrote: »

13,500 clients at a per customer value of at least £100 each (if you consider the circa £100 to £500 cashback you can get to open or transfer an investment account) would be an asset worth at least £1.35m. If the client assets are still safe then their accounts will surely be transferred (sold) to another platform. Probably one that does not have the lowest charges so they can recover the customer acquisition cost.

Agreed, if the books balance then this is by far the most likely outcome.

It would therefore be nice to get clarification around the following FCA statement:

"Acting on intelligence received about the assets in which SVS invested its clients’ money, we conducted urgent supervisory work and identified serious concerns about the way in which the business was operating."

londoninvestor

masonic wrote: »

That's a real shame for bondholders. I don't fancy their prospects of receiving much, if any, of their capital back now.

Are the administrator's costs paid for out of the company's assets, before using client assets?

If so then you'd think bondholders' money will all disappear for that alone.

masonic

londoninvestor wrote: »

Are the administrator's costs paid for out of the company's assets, before using client assets?

If so then you'd think bondholders' money will all disappear for that alone.

The normal process would be that administrators would apportion their fees between company and client assets.

They would therefore seek to recover costs associated with dealing with non-trust assets (for example statutory duties and matters relating to staff and other creditors) from realisations from the company's assets.

Costs associated with general trust assets (such as reconciliation of the investment records and assets held within the nominee companies) would be charged against the assets of all investors, while depending on the nature of the work, there might also be costs associated with specific trust assets, which could be allocated to the specific asset in question.

The administrators' have a responsibility to the creditors of the company, so fees associated with activities that are of no benefit to the creditors, but which are of benefit to clients, would not be paid for out of money that could be used to repay the creditors (this assumes that there won't be excess company assets after creditor claims are settled - which seems likely).

All financial firms are also required to have a "living will" that is funded, to allow for the orderly wind-down of the business if it fails. It has not been stated whether SVS has such an arrangement, or whether it is funded, but this money is also ring-fenced and would be used against the fees charged to the clients but not the creditors.

The CASS rules provide for all of the above, for agreed fees. The administrators will soon invite the formation of a creditors committee, who will have the ability to agree those fees. In the absence of a creditors committee, the administrators would need to seek the Court's approval for their fees. It is likely that one or more bondholder would seek to get themselves onto the creditors committee.

londoninvestor

masonic wrote: »

Costs associated with general trust assets (such as reconciliation of the investment records and assets held within the nominee companies) would be charged against the assets of all investors, while depending on the nature of the work, there might also be costs associated with specific trust assets, which could be allocated to the specific asset in question.

The administrators' have a responsibility to the creditors of the company, so fees associated with activities that are of no benefit to the creditors, but which are of benefit to clients, would not be paid for out of money that could be used to repay the creditors (this assumes that there won't be excess company assets after creditor claims are settled - which seems likely).

Very clear - thanks!

Reaper

to_jackie_too wrote: »

This is incorrect. A broker/platform needs explicit permission (in their Terms & Conditions) in order to be allowed to lend out their clients' shares. And I'm not aware of any UK-based platforms which include that in their T&Cs.

Thanks for the correction, I thought I had read they did but I must have been mistaken.

However if you buy funds or ETFs with your account then you can still end up lending to short sellers.
https://www.ft.com/content/d4706b0e-e40a-11e7-a685-5634466a6915
https://www.theguardian.com/business/2011/aug/31/stock-lending-short-selling (bit old this article but I doubt anything has changed)