Special administrators working on the shuttered wealth management firm WealthTek LLP have found a potential £81.4m shortfall in client money.
New information from the Financial Conduct Authority (FCA), which last month closed down the Newcastle-based firm, also reveals that director John Dance has seen assets worth £40m frozen amid a fraud and money laundering probe. The FCA says WealthTek, which had about 1,470 clients also traded as Vertem Asset Management and Malloch Melville, did not have permission to hold client money or custody assets.
The watchdog has previously said it moved to protect consumers amid "identification of serious regulatory and operational issues" and since closing down the firm is conducting a regulatory and criminal investigation into both WealthTek and 48 year-old Mr Dance, who was arrested by Northumbria Police in April.
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In an update on the case, the FCA said it had obtained a worldwide order to freeze Mr Dance's assets in case some may potentially be used for distribution or confiscation following the conclusion of any civil or criminal proceedings it brings. Mr Dance was joint-owner of the successful racing horse Bravemansgame, which last month the British Horseracing Authority withdrew from racing at Aintree.
A statement said: "The FCA considers it important to note that whilst this order restrains and prevents Mr Dance from dissipating any of his identified assets, it 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."
Special administrators appointed to WealthTek say they have secured the firm's Cobalt Business Park premises, safeguarded its books and records, and made a series of redundancies - including at least 17 people in early April. Shane Crooks, Mark Shaw and Emma Sayers, all of BDO LLP, were appointed interim managers of the firm and say that a potential £81.4m client asset shortfall is still being investigated.
Clients and creditors of WealthTek will get the opportunity to vote on proposals at a meeting at The Met Hotel in Leeds on June 14 - where it will also be decided whether a clients and creditors committee should be set up.
Separately, one of Newcastle's largest nightclub businesses, founded by Mr Dance and two other partners, has closed. The Lofts and The Hustle shut down with the loss of 79 jobs after administrators were brought in to the company behind the venues, Dead Vibey Leisure Limited.
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