SVS Securities - shut down?

Thrugelmir

manorhouse said:

It defiantly is the business of all to be aware that shares were missing , it is not clear if the client brought this to there attention or the administrator spotted it .

Be an overall reconciliation of the overall holding.  Easiest and cheapest way of resolving the matter is to treat all stock holders equally. Perhaps one of a number of similar events. That is a reason behind the slow process. In due course full details will be published. 

masonic

manorhouse said:

Just to clarify ( but i think you had guessed bowlhead ) they are giving the missing 15% allocated to me .
Compensation at the 5th of April close price. And all mine did exist it was one other customer who it seems had a shortfall.

I don't really see the rationale for picking 5th April (especially given it was a Sunday and markets were closed). The fact that the actual shortfall was the result of a trade by another customer makes sense if you had not traded the share recently.

manorhouse said:

The point about mentioning 18th March is that would of been a time i could of purchased using money i have  if they had informed me before then .

It's not beyond the realms of possibility that the discrepancy was not identified (or did not exist) until after the 18th March.

If I remember correctly, there was some discussion about how such a scenario would be treated in one of the many communications published by the administrators, and at that point it was not a settled issue.

What they have done is in effect allowed you to continue to hold the shares until 5th April, at which point they are allocated to the investor whose trade caused the shortfall and you are compensated to the value of the shares on that date.

It's unclear if you are saying you would seek to maintain your holding subject to having the money upon discovery that you no longer held it, if so you will obviously be looking to repurchase next week, and the good news is the share price is not much different, so you could pick up for about the same amount as the FSCS compensation you'll eventually receive.

It is worth remembering that on 18th March, you wouldn't have known the share was in a temporary dip, and if they credited you with the value at or around that time, they might have shot up in value before you had chance to repurchase.

manorhouse said:

It defiantly is the business of all to be aware that shares were missing , it is not clear if the client brought this to there attention or the administrator spotted it .
If any others have been sent anything similar i hope they will post information .

Some here are of a more defiant disposition than others, but it's certainly worth being aware. Especially as one or two already have FSCS claims they want paying and might not benefit from any additional compensation for new losses. It is well known that trades made towards the end did not settle, and some of these might have been in dispute. It's worth people knowing that if any share they are holding at SVS suffers such a discrepancy, they can expect to carry a share of the burden.

manorhouse

( 1 ) Sorry Masonic and all if i said 5th April ( so busy ) 5th August 2019 of course i wish my e-mail would copy it was generic i could take my name and contact off it .
These standard letters should be public.
Do you think it might of been a recent trade and that those who didn't trade recently to close down should not have a shortfall ?
I have hundreds of different shares did not print every trade contact note be to much work, and bound to miss a few if i had practised that .
When i rang the administer man months back who seemed very knowledgeable he told me there records unlikely to be wrong that why yesterdays e-mail concerning.
Alarming when i read  others would take a hit ! but better when i read down and was told full compensation.
( 2 ) That is true masonic but why can they not say when they discovered the shortfall of this other customer whats wrong with total transparency ?
 And could it of been a more recent  decisions  after maybe taking legal advise that they split the shortfall of one among all holders .
Or is this "standard " ?
And yes i am looking to but back that 15% but i will wait for a dip ( i missed one ) of course with another broker and with other cash.
I bought about 20 different shares around the lows in March then run out of funds, in February 30  ( That was not the bottom in hindsight ) there is a possibility i might buy next week i have no idea what market prices will be.
I could of purchased  yesterday but they were not on my list of buy limits set .
I do not why you refer to "temporary dip " ? with hindsight everyone can see that.

masonic

manorhouse said:

( 1 ) Sorry Masonic and all if i said 5th April ( so busy ) 5th August 2019 of course i wish my e-mail would copy it was generic i could take my name and contact off it .
These standard letters should be public.
Do you think it might of been a recent trade and that those who didn't trade recently to close down should not have a shortfall ?

The preliminary view of the administrators was that the books balanced. So it is certainly possible that any imbalance identified more recently could be the result of trades placed in the days leading up to the shutters coming down - these trades were unsettled and SVS was certainly in default in respect of those trades.Equally, something could have been identified by others when they reconciled their accounts. But if, as your letter stated, one investor has lost 15% of the total PETS shares held by SVS, it does suggest that investor placed a very large order and something went wrong with that order (money gone, and no shares received, which is a bit of a head-scratcher).

manorhouse said:

I have hundreds of different shares did not print every trade contact note be to much work, and bound to miss a few if i had practised that .
When i rang the administer man months back who seemed very knowledgeable he told me there records unlikely to be wrong that why yesterdays e-mail concerning.
Alarming when i read  others would take a hit ! but better when i read down and was told full compensation.

I'm presuming SVS holds only 85% of the PETS shares it thought it did, and the other 15% belonged to just one investor. Therefore, as a result of being a pooled nominee account, all investors in PETS will receive 85% of their shareholding and lose the other 15%. For someone not to be fully covered by the FSCS for this loss, they'd need to have invested more than £566k in PETS, or have other such losses that push them over the compensation limit. Anyone taking a hit on this would have to have vast amounts invested, or REALLY believe in that share.

manorhouse said:

( 2 ) That is true masonic but why can they not say when they discovered the shortfall of this other customer whats wrong with total transparency ?
 And could it of been a more recent  decisions  after maybe taking legal advise that they split the shortfall of one among all holders .
Or is this "standard " ?

It is customary for businesses not to reveal details of individual customers' use of their services to other customers. There might also be an ongoing investigation into the situation. You know that they've only very recently gained enough confidence that the record is unlikely to be wrong, hence the email. It would not have been a good idea to let you know until they were confident.

The way in which they should distribute assets from a pooled nominee account in the case of a shortfall is well described, but the circumstances surrounding the shortfall would need to be understood.

manorhouse said:

And yes i am looking to but back that 15% but i will wait for a dip ( i missed one ) of course with another broker and with other cash.
I bought about 20 different shares around the lows in March then run out of funds, in February 30  ( That was not the bottom in hindsight ) there is a possibility i might buy next week i have no idea what market prices will be.
I could of purchased  yesterday but they were not on my list of buy limits set .
I do not why you refer to "temporary dip " ? with hindsight everyone can see that.

I seem to recall the rhetoric at the lows in March that "this was just the start of a great depression", "any rise will be a dead cat bounce before markets go much lower", etc. One individual who frequents this forum declared they were selling up and putting everything in gold pretty much at the bottom of that temporary dip as it turned out to be. So when people say they would have bought when prices were lower than they are today, I am naturally sceptical. If you were buying all the way down, then it is a bit more believable, but looking on the bright side, if you had been informed about the potential loss any time between November and February, you might have been tempted to repurchase your shares at a higher price than they are currently trading.

bowlhead99

manorhouse said:

I do not why you refer to "temporary dip " ? with hindsight everyone can see that.

Because you are claiming with hindsight that you if you had known that your shares were missing you could have bought them on the lowest point of the year, 18 March:

"On 18th March i could of done that for 197p a lower price, they are 243p toady so i am at a loss were i did not need to be." [sic]

Last night you were telling us, "I buy a least one share every day" [sic]. So if you had known at the end of the year that you had a shortfall in these Pets at Home shares, it seems implausible that rather than buying them in January or February for over 250p, you would have waited until 18 March to buy them at 197p, and not even missed the bottom slightly by one day to buy them on 19 March for 234p. 

You mentioned above "I bought about 20 different shares around the lows in March then run out of funds, in February 30":
- if running "out of funds in February 30" is a typo for March 30 - if you'd had the compensation money for the 15% missing PETS shares you would not have quite run out of money on March 30, so you could have bought then, but you would have been paying 263p.
- if running "out of funds in February 30" is a typo for February 28th (as there aren't 30 days in Feb, and 29th wasn't a business day); if you'd had the compensation money for the 15% missing PETS shares you would not have quite run out of money on Feb 28th , so you could have bought then, but you would have been paying 257p.

It just seems unlikely that you would have spent your money on buying back the missing shares on one of only two days in the last five months where the price temporarily dipped to under £2. Which is why I mentioned that you shouldn't expect compensation to put you back in the best position you could have been in with the aid of hindsight and a time machine.

I agree with Masonic that it is worth people being aware that if a stockbroker/ nominee has an unresolved shortfall between the stock they are claiming to hold for their customers in aggregate, and the actual stock they do hold for the customers, then the customers in aggregate may need to bear a loss. This is part of the sort of thing that FSCS exists to cover if the investment firm isn't around to pay the compensation itself. When people enquire generally on this forum whether their shares or investment funds are 'safe' with brokers and their pooled nominees and investment platforms, and ask in what sort of circumstance might FSCS be useful... a loss due to fraud or error is one of the risks mentioned. 

However, I don't really agree that the administrators need to be sending out letters informing them of the  reconciliation difference on Pets at Home or other stocks to people who *didn't* have any lines of stock which were subject to a loss. Other than morbid curiosity, it is just not relevant to those customers. As Masonic notes, "It is customary for businesses not to reveal details of individual customers' use of their services to other customers. There might also be an ongoing investigation into the situation". 

If SVS were staying in business, it might be useful for the unaffected customers to be informed - because it would help add colour to their judgement about whether to continue to use SVS (i.e. if they were aware that screw-ups at SVS have caused some customer losses, they may rightly be concerned).  However there is no risk that any customer will accidentally believe that SVS are great and they should stay with them or recommend their friends to use them. SVS are no longer in business.  So it's just morbid curiosity, wondering how much other people have lost. The fact that something can be lost, is already known.

manorhouse

The preliminary view of the administrators was that the books balanced. So it is certainly possible that any imbalance identified more recently could be the result of trades placed in the days leading up to the shutters coming down - these trades were unsettled and SVS was certainly in default in respect of those trades.Equally, something could have been identified by others when they reconciled their accounts. But if, as your letter stated, one investor has lost 15% of the total PETS shares held by SVS, it does suggest that investor placed a very large order and something went wrong with that order (money gone, and no shares received, which is a bit of a head-scratcher).
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Firstly  thank you masonic how i wish i could of just copied and posted letter . its a 250 stock anybody else have it ?
If i did not make clear it is 15% of mine that they are taking away from me , know idea about others i thought this guy must have had a big holding ? but no idea how much , no idea how many of us with SVS in PETS , but as i  said it is a 250 share.
My compo is £500 so i did not have a very big holding . ( They could of just cancelled his trade he must of made a profit on it, as from memory some news came out and dropped it around that time ).
I did not buy it around that time, and have held it since shortly after IPO.
Wonder if he was some big short with money and lawyers swinging things his way i do not think investing is a level playing field .

( 2 ) I seem to recall the rhetoric at the lows in March that "this was just the start of a great depression", "any rise will be a dead cat bounce before markets go much lower", etc. One individual who frequents this forum declared they were selling up and putting everything in gold pretty much at the bottom of that temporary dip as it turned out to be. So when people say they would have bought when prices were lower than they are today, I am naturally sceptical. If you were buying all the way down, then it is a bit more believable, but looking on the bright side, if you had been informed about the potential loss any time between November and February, you might have been tempted to repurchase your shares at a higher price than they are currently trading.
.....................................................................................
I seem to recall many big wigs changing there mind day my day i thought it was shameful . ( Maybe you are referring to posts on here and i am referring to general news in press )
You might recall i posted my annoyance when my broker cut the margin three times in one week , and i had to ask my niece for funds to prevent a forced sale . ( ironically i would of been ok as market dropped further , but i want to make the decisions on my money )
I have never asked family for a loan before so embarrassing , i will not let the rouges catch me again and when they revert it to the larger margin i will not use it .
If i manage to find a new good new broker i will stop buying with them . 
Even that buffet who i had thought was trustworthy this week spoke about the farmer .
Yet not so long ago was saying  he could "defiantly" make 50% on one million . ( He corrected himself from probably i recall )
And then says you can not beat the S&P 500 .
Claims fund managers not worth it ?
And what is he ?
I doubt i would of bought these back in Nov / Feb ( unless i have missed something and pets was below the forced sale price then )


 

bowlhead99

manorhouse said:

Even that buffet who i had thought was trustworthy this week spoke about the farmer . 

Buffett has used the farmer analogy (https://www.youtube.com/watch?v=_sb6RKc_g_g) in the past.

Essentially if you find a farm with hundreds of acres that you like, and intend to hold it for a long time into the future (accepting there will be some good years and lean years along the way in terms of what it yields and what you can get for selling the corn or other crops from time to time), you do not need to be concerned when your neighbour - who has a an equivalent farm to yours - keeps shouting out every day how much he would pay to buy your farm or accept for you to buy his, and changes the number every single time.

The daily bid and offer from the neighbouring farmer can be to your advantage (because sometimes he will shout a silly high price to buy your farm, or offer a stupidly low price for you to buy his) but it is only an option - you don't need to take him up on it. If you bought your farm with the intention of profiting from years of crops, there is no need to be nervous and sell to him just because he shouts he'll buy your farm $2000 an acre one day, $1200 the next day and only $800 the next. If nothing has fundamentally changed with your farm, which you originally bought at a good or fair price for its prospects, you can keep it forever. You are of course taking a risk if you might need to sell up at a bad time, or if like manorhouse above you are leveraged and the farmer's incessant negative shouting inspires a margin call.

The farmer analogy can be quite useful in explaining to nervous investors why it is not unreasonable to ignore market noise unless it offers you great advantages (being able to buy something way too cheap or sell something for way more than you consider to be its intrinsic worth).  A lay person might think the 'crazy neighbour' whose farm is always for sale and always wants to buy yours, is a little bit unhinged if he thinks your farms should fundamentally be worth a different amount of money each morning. Likewise if you have bought a decent business with decent management and it still has decent prospects, you don't need to be fearful that 'the market' assesses it differently the next minute or day or month. Of course if the fundamentals of the business have changed or you don't really trust the management then you should question whether you still want to own it.

Buffett has used the analogy before, and the idea that he is somehow not trustable because he continues to use it: ("Even that buffet who i had thought was trustworthy this week spoke about the farmer"(sic) is probably your misunderstanding of why people should or shouldn't be trusted.

Yet not so long ago was saying  he could "defiantly" make 50% on one million . ( He corrected himself from probably i recall )

He didn't say "defiantly" - you keep writing defiantly when you mean definitely (twice in the last three posts).

But context is everything. What he said was:

• The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.

His highest returns in previous years when he was managing smaller amounts were really more in the 30% range. But the comment is in relation to the fact that it is much harder to make large returns on big numbers (Berkshire Hathaway has a couple of hundred billion of equity investments within its $7-800bn consolidated gross assets on the balance sheet). Whereas if you only have a million you can make nimble investments in good smallcap opportunities that simply wouldn't move the needle on 200 billion. If you can put in an excruciating amount of work to uncover the opportunities, and can do some deals with a willingness to lose all your investment if things go bad, it would be much easier to make 50% on a million than on a hundred billion - and not actually need to be as reckless as being willing to lose it all.

So when people noted a year or two ago he was sitting on some surplus cash, he answered "If I was running $1 million today, or $10 million for that matter, I'd be fully invested", and went on to point out that large size hurts investment performance - the opportunities to invest meaningful portions of a several hundred billion warchest in a great long-term prospect simply don't come up every day. Then the quote above about how if he only had to invest a million he could make 50% by using the smaller end of the market.

And then says you can not beat the S&P 500 .

He says in the video I linked, which started with the farmer analogy, that as an investor you will do well by "...investing in a cross section of America... as most people are not in a position to be able to pick single stocks... a few may be, but on balance most people are better off buying a cross section of America and just forgetting about it..."

This is broadly consistent with his comment that you can do well by just buying the business (farm) that you like and if its fundamentals continue to be sound, simply continue to hold it. A lot of people will take notice of what the neighbouring farmer is shouting daily and will try to convince you that you should take notice of it and that they can tell you what he will be shouting tomorrow - as there is a lot of money in doing so.  Rather than pay money to the people who are guessing what to buy and sell next and actively moving in and out of things for you in exchange for a fee, you can just buy that broad cross section and you will do just fine over the longer term.

It is not a surprise that he tells joe public to buy an index fund and forget about it, to save them the hassle of picking which fund manager to pay, and not a surprise that he has left instructions that after he passes, his wife (who will have more money than she could ever need to spend) should just hold a simple portfolio of the US equity index and some bonds, to save her being preyed upon by slick 'wealth managers' for a fat fee.

That doesn't necessarily mean that a typical UK investor should just buy and hold the US S&P - or that his investors would be better served if he and his analysts who have made educated decisions about what assets to hold supported by a sound investment case should simply dump them and take the standard mix of good, bad and ugly that comes within the cap-weighted index. We can all come up with 'do as I say, not what I do' bits of advice from time to time, and guidance delivered through soundbites is rarely the whole education.

Claims fund managers not worth it ?
And what is he ?

The 'what is he?' question could be answered with:
"The chairman of a successful insurance, railroad, utilities and energy conglomerate which has $7-800bn in assets on its balance sheet - including a couple of hundred billion of equity investments and over a hundred billion of cash and treasury bills - who is known as a legendary public and private markets investor that talks a lot of common sense. Though is often quoted by people who grab soundbites and use them without understanding the context in an attempt to sound clever or prove their own point of view."

manorhouse

They use to say some guy called Woodford was the British Buffet .
Now its a guy called Train who they crown with that.
I would not trust any of these types , more then likely went to a public school, privileged types 
They would not put  "defiantly" - when they mean  definitely  most probably never had any kids in the class who couldn't even speak English properly .
I love taking these types on. 

 "or if like manorhouse above you are leveraged and the farmer's incessant negative shouting inspires a margin call."
When i hear leverage i think of spread betting something i am not willing to play with the public school boys .
Some one on here posted moving to HSBC share dealing that is were i first came across a broker willing to lend you money against your value of shares they offered   6%   apr .
These dutch boys 2%.... its about balance.
Now there is an argument for not using a cheap broker did HSBC call there loan in ( Reduce the amount available )
During the very best time one could use it ?
But then again maybe i would not if someone was paying 6%

Thrugelmir

manorhouse said:

I would not trust any of these types , more then likely went to a public school, privileged types 

Hopefully you undertake serious research before investing your money. Assumption is a self made hole that's easy to fall into. Shovels are two a penny. 

bowlhead99

manorhouse said:

When i hear leverage i think of spread betting something i am not willing to play with the public school boys .
Some one on here posted moving to HSBC share dealing that is were i first came across a broker willing to lend you money against your value of shares they offered   6%   apr .
These dutch boys 2%.... its about balance.
Now there is an argument for not using a cheap broker did HSBC call there loan in ( Reduce the amount available )
During the very best time one could use it ?
But then again maybe i would not if someone was paying 6%

When you mentioned Degiro's reduction in allowed margin levels before, I pointed out why they would want to be careful about giving everyone credit against their stock balances. With the size and speed of the drops in some shares that week, some of their customers trading heavily on margin will have lost their shirts, while others may have been tempted to place bigger geared bets to recover losses, and those customers' gambles might go wrong again. So it made sense to be careful to whom you extend credit in the unstable market environment, and how much credit you offer, especially when companies can go bust leaving the equities worthless. 

Degiro were letting people leverage 5x, i.e. you only needed to front 20% of the equity yourself. When the value of a share can crash 60% in the short term (IAG fell 70% over a month, Restaurant Group down 83% in same timescale, the blue-chip Shell down 60% in less than a quarter) it is not a risk-free game to be providing high margin share trading with the value of the collateral plummeting. 

You said my pointing this out was a silly remark because they would just force a sell of the shares if someone didn't pay their margin. But if companies go out of business or their shares are suspended from trading, the broker can't get rid of them, and is reliant on being able to liquidate the customers' other assets. A client who is only using the broker to hold one or two stocks might not have a lot of collateral in the account, especially as they offered even greater leverage to customers who tracked indexes, and the major equity indexes appeared to be in freefall too.  That is why they made a margin call on their customers, reducing the leverage available, and you had to borrow money elsewhere to fund your account. You were happy that 'these dutch boys' didn't charge a high rate of interest on the margin they granted, but now think they are rogues (or rouges?) for reducing the level of margin the made available to you during unprecedented market conditions.

Clearly if they are charging a low interest rate for supplying you with leverage, it is important that they don't suffer credit losses due to people being unable to settle their positions. So if they make you put in 25% of the equity instead of only 20% they will have lower risk if something goes pop. It's the same principle with getting a mortgage on a house. People don't expect to get the lowest rates in town if they're doing high LTV borrowing.