According to John Gracey, director of structured products at Merchant Capital, all client assets had been transferred after Pritchard, which acted as custodian for the firm’s structured products division, was issued with a supervisory notice by the regulator in February.
The notice, which prohibited Pritchard from carrying on any of the regulated activities except to close transactions that had already commenced, concerned alleged breaches in relation to client asset handling at the firm, including use of client funds in its own accounts.
Following the announcement on 20 February, Merchant announced that it had appointed Reyker Securities as a new custodian for client funds in its structured products division.
Merchant said it had “a fully reconciled statement of the client money held in its segregated client account at Pritchard” and that it had sent all relevant information to the FSA to help with the transfer of funds to Reyker.
Mr Gracey said that 98 per cent of funds had been successfully transferred, with the remaining two per cent, around £6m of client monies, frozen at Pritchard.
This includes for example money from matured policies which has not yet been claimed, and money paid by clients to Pritchard which had not yet been invested, Mr Gracey added.
He said: “We assumed based on the announcement on 10 February that something serious was going to happen.
“People who are invested in structured products that we are looking after are all now safely with Reyker and life will return to normal.”
“Any more bad PR for the structured products industry we were very keen to avoid.”