The Financial Services Authority (FSA) confirms that Pritchard Stockbrokers Ltd (Pritchard) has entered the Special Administration Regime (SAR) on 9 March 2012 and Timothy Ball, Roderick Weston and Alistair Wood at Mazars LLP have been appointed joint special administrators.

On 29 February 2012, another stockbroker, WH Ireland announced that it had taken charge of assets (but not money) belonging to the majority of Pritchard Stockbrokers’ customers. This means that, in the near future, former customers of Pritchard Stockbrokers will be able to start dealing again through WH Ireland. WH Ireland is in the process of informing customers of timings. The joint special administrators will review the client cash holdings positions and will return as much cash as possible directly to each client.

Customers of Pritchard should contact the joint special administrators for more information.

Background

1. On 10 February 2012, the FSA issued a Supervisory Notice stopping Pritchard carrying out its business. In addition, the FSA froze Pritchard’s assets and the investor money and assets it holds. The FSA took this action because it had serious concerns about the way that Pritchard has been running its business and handling investor money. The FSA was concerned that the firm had failed to adequately protect the money that it holds on behalf of investors, and has allowed this money to be used to meet its own costs.
2. The Special Administration Regime came into effect in February 2011 and sets three objectives for a special administrator:

   a. to ensure the return of client assets as soon as practicable;
   b. to ensure timely engagement with market infrastructure bodies and the authorities; and
   c. either to rescue the firm as a going concern or wind it up in the best interests of the creditors.

   In an ordinary corporate administration proceeding only the third objective would apply.

3. This is the second time the SAR has been initiated
4. The FSA can direct the special administrator to prioritise one or more of these objectives if it deems that to be necessary on UK financial stability grounds but before it does so it must consult HM Treasury and the Bank of England.
5. The special administrator can direct any suppliers to continue to provide key services to the entity in the SAR, to facilitate an orderly resolution.
6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.