The Financial Conduct Authority has frozen the assets of North East fintech WealthTek’s principal partner, and launched a criminal investigation, after a potential shortfall of £81.4m in client money was found.
The Financial Times reports that the regulator has obtained a worldwide order to freeze assets belonging to prinicipal partner John Dance up to the value of £40m, with the aim of preserving assets which may potentially be available for distribution or confiscation following the conclusion of any civil or criminal proceedings brought by the FCA.
The FCA said the order restrains and prevents Dance from dissipating any of his identified assets, but does not preclude him from claiming “reasonable living expenses or from continuing to operate his horse business or any other existing business unrelated to the matters featured in the proceedings brought by the FCA to date”.
Although Dance is permitted to continue running his horse business, last month the FCA obtained a court order which resulted in a racehorse part-owned by Dance being barred from competing at Aintree.
The latest move follows the announcement in April that the FCA had ordered Newcastle-based WealthTek to cease operations.
The regulator is currently carrying out a regulatory and criminal investigation into both WealthTek and Dance, which includes potential regulatory breaches relating to client money and custody assets and criminal offences of fraud and money laundering.
Although FCA-regulated, WealthTek did not have permission to hold client money or custody assets. It has said further investigations are needed and advised any clients of the firm with concerns to contact the joint special administrators – Shane Crooks, Mark Shaw and Emma Sayers of BDO LLP.
According to the regulator it is working closely with the joint special administrators and is aware of the potential shortfall of £81.4mn in client assets and money associated with WealthTek as of April 6 2023. WealthTek also traded under the names Vertem Asset Management and Malloch Melville.
