SVS Securities - shut down?

masonic · 5 August 2019 at 12:21PM

New Citywire article, but no new information: https://citywire.co.uk/wealth-manager/news/private-client-broker-believed-to-have-collapsed/a1256861?section=wealth-manager

While it's a little surprising more of the media haven't picked this up, it was a small broker, and most likely there just isn't any more information out there at the moment.

No doubt within the next couple of days, the website will be replaced with a page announcing appointment of administrators. Existing clients will probably be contacted by email with an initial communication from the administrators. The FCA will then announce the failure of the firm on its website.

Likely none of this will happen before the administrators have been on site and taken control of the IT side of things and made an initial assessment of the state of the platform databases.

At the moment all anyone can do is wait for further news.

masonic · 5 August 2019 at 12:24PM

My2penneth wrote: »

If SVS actually do go into administration then an administrator would be appointed. The administrator wants paying for handling this work. Who pays for this work...initially SVS ...but if they do not have sufficient funds in their bank account, then the administrator might legally try to access our accounts and sell shares to pay for their services ( see Beaufort Securities) . Our holdings would be sold in part and so we would incur losses. The FSCS would cover for such losses....to the 85k limit per account ( or 170k in a joint account). Whilst legal....and PricewaterhouseCoopers tried to go down this route with Beaufort Securities ...the Financial Conduct Authority "had words" with PwC and then the FSCS stepped in to cover the costs in a deal with PwC. PwC were extremely greedy.

Firms are required to have a "living will" that is funded to cover these eventualities. In the case of a simple wind-down or sale, this money should be sufficient to cover these costs. If the situation becomes more complex than that, then that's when client assets are at risk (but subject to FSCS cover). There's no reason to think at this stage that there is anything untoward about the XO side of the business.

My2penneth · 5 August 2019 at 12:29PM

In a nominee account where shares are pooled we are most definitely NOT the owner of shares..they are in SVS' name.

Edit: following on from Masonic's comment above
"If the situation becomes more complex than that, then that's when client assets are at risk (but subject to FSCS cover)"

The shares and cash are in so called ring fenced accounts but these only protect them from creditors.
Note, an appointed administrator can sell these shares legally to pay for their work in sorting things out...such as transferring holdings to another platform. This attack on shares caused a big kerfuffle when it was realised that the law allowed PwC to go down that route.

Fortunately, the FCA have set a precedent with Beaufort Securities in their handling of PricewaterhouseCooper and the same will most likely apply here if do-do hits the fan.

Legally, the shares are ring fenced but not entirely untouchable. Then FSCS would kick in.

masonic · 5 August 2019 at 12:39PM

My2penneth wrote: »

The shares and cash are in so called ring fenced accounts but these only protect them from creditors.
Note, an appointed administrator can sell these shares legally to pay for their work in sorting things out...such as transferring holdings to another platform. This attack on shares caused a big kerfuffle when it was realised that the law allowed PwC to go down that route.

Fortunately, the FCA have set a precedent with Beaufort Securities in their handling of PricewaterhouseCooper and the same will most likely apply here if do-do hits the fan.

Legally, the shares are ring fenced but not entirely untouchable. Then FSCS would kick in.

Yes, administrators need to be paid, otherwise they would not take on the job, and so called "trust assets" are fair game. However, expenses will be apportioned across the investor base and are unlikely to exceed £85k even for clients with a total portfolio several-fold in excess of that level. In the case of Beaufort, they were capped below that level.

My2penneth · 5 August 2019 at 12:52PM

Hi Masonic, thanks for that (costs being spread and cost capping.)

Just one other note I'd like to add....the notes above and comments I believe to be fair and reasonable and I'm reasonably relaxed (2 accounts in my and my wifes name both well above 85k holdings ). Yhings will take time to work out BUT don't get too upset if you read comments on other boards that suggest that investors with SVS are in do-do...some posters do it to wind people up.

Note ...SVS are indeed FCA regulated ...the FCA will be very very very (!) keen to resolve the issues with no harm to SVS clients..the FCA have a reputation to uphold. They would lose all credibility if an FCA regulated company left investors in the lurch,.

Wow...its lunchtime!

IanManc · 5 August 2019 at 12:58PM

My2penneth wrote: »

In a nominee account where shares are pooled we are most definitely NOT the owner of shares..they are in SVS' name.

The shares are held in the name of a nominee. The nominee is not the owner - the nominee holds them on behalf of the owner.

The person who bought the shares is the beneficial owner. A nominee is just that - the person who the owner nominates to hold the shares in their name on the company's register, on behalf of the owner

johnburman · 5 August 2019 at 1:42PM

Its 1.40pm on Monday on 5 August and why no administrator appointed? Sods law the market has taken a substantial tumble and we have no idea what's going one with *my* shares [Ok its in a pooled nominee account in SVS's name, I hope, but they are my shares beneficially!]

Mike_NW · 5 August 2019 at 2:02PM

I have also been locked out of my investment Isa with one of my companies in the process of being taken over. I have no intention of trading at this moment in time as I suspect a significant increase in MC.
Does the FCA only cover the original investment price or the capital gain.
Cannot find any info or updates on the internet despite SVSXO having many clients.

Thrugelmir · 5 August 2019 at 2:08PM

johnburman wrote: »

Its 1.40pm on Monday on 5 August and why no administrator appointed?

Somewhat more complex than the simply asking someone to take on the role and making an announcement.

Reaper · 5 August 2019 at 2:09PM

manted wrote: »

As a new user not allowed to post links.(so havent posted a link to cityam article)
you can Google Carbon credits svs deutsche to have a read.
I keep kicking myself for not checking news related to SVS more often...I am also being hopeful that we don't even have to go to that extent and the matter resolves quicker than Beaufort and some other broker gets our accounts.

The bad news is... there are parallels with Beaufort. It is likely the carbon credits allegations will slow things down.
The good news is... there are parallels with Beaufort. The tricky issues last time (eg can the administrators dip into client funds and would the FSCS cover them if so) have been resolved so it should go a lot more smoothly this time.

In short you might have a bit of a wait but you can be pretty confident of getting all of your investment back.

SVS Securities - shut down?

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