Barred broker agrees £500k client book sale

Broker and wealth manager WH Ireland has agreed a deal to acquire part of the client book of the beleaguered Pritchard Stockbrokers, which is currently the subject of a supervisory notice from the regulator, including 8,000 active private clients and £400m assets.

The Financial Services Authority issued a supervisory notice to Pritchard earlier this month that prevents the firm from carrying out regulated activities except to close transactions that have already commenced.

The regulator alleges that Pritchard breached regulations in relation to its handling of client assets, which the FSA says could have been used in its own accounts.

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Merchant House, parent company of Merchant Capital, which employed Pritchard as asset custodian for its structured product division, issued a statement to the stock exchange earlier this month confirming that clients may suffer economic losses as a result of the supervisory notice.

The purchase accompanies a cash consideration of up to £500,000, half of which was paid on completion of the transaction and half to be paid subject to the successful transfer of the acquired assets.

In the financial year ended 30 June 2011, the assets in question generated a loss of about £6,000 for Pritchard.

Paul Compton, chief executive officer of WH Ireland, said: “The transaction increases our regionally based private client business and moves our nominee funds total forward.

“It provides and immediate resolution to what had become a worrisome situation for Pritchard clients. We welcome them to WH Ireland and look forward to meeting their financial needs.

“We fully expect this transaction to be earnings enhancing in the first full year following completion.”

The transaction will increase WH Ireland’s number of private-client stockbroking clients by about 50 per cent and total assets under management by about 25 per cent.