Reyker Securities Plc (in Special Administration)

Mark Ford, Adam Stephens and Henry Shinners of Smith & Williamson LLP were appointed Joint Special Administrators (“the JSAs”) of Reyker Securities Plc (in Special Administration) (“Reyker”) on 8 October 2019.

This website provides Clients and Creditors with important information and will be updated when additional information becomes available regarding the Special Administration of Reyker.

IMPORTANT NOTICE – ACTION REQUIRED – 26 June 2020

Following the passing of the Bar Dates on 7 April 2020, the JSAs are required by statute to provide a further 14 days’ notice to Clients who have not yet submitted a claim.

The JSAs have now written to all those Clients who have not yet submitted a claim (letter dated 26 June 2020). A copy of the letter can be found here.

If you want to submit a claim to Client Money and/or Custody Assets, please do so as soon as possible and by no later than 21 July 2020.

The Company considers it holds Client Money and/or Custody Assets for you and if you do not submit a claim by the above date, the JSAs will rely on the Company’s records when making the Distribution Plan in respect of Custody Assets and making the upcoming first interim distribution of Client Money and you may lose any right to dispute this. You are therefore strongly encouraged to submit your claim to Client Assets on or before 21 July 2020.

To access the Portal to submit your claim use the following link: www.reykerportal.com.

Full details on how to submit your claim can be found in the JSAs letter dated 6 March 2020. A copy of this letter can be found here.

Should you have any queries, or do not have access to the internet, please contact Client Services on 0800 048 9512 or clientservices@reyker.com.

If you have already submitted a claim, you will not receive a copy of this correspondence and no further action is required at present.

Update message for the Company’s Clients and Creditors – 12 June 2020

Headlines

WARNING - Fraudulent communication

  • The JSAs are aware that some Clients continue to receive fraudulent communications in which they have been advised that either their Client Assets are not safe or, alternatively, that the JSAs are seeking to return their assets within the next 30 days and that an upfront bank transfer is requested in order to release their Client Assets. This information is incorrect.

  • ALL ASSETS HELD BY REYKER ON BEHALF OF ITS CLIENTS REMAIN SAFE AND UNDER THE CONTROL OF THE JSAs. NO PAYMENTS SHOULD BE MADE TO ANY THIRD PARTY TO RELEASE CLIENT ASSETS.

  • Fraudsters are using fake website domain names or email addresses to impersonate the Reyker, such as ‘clientservices@reyker-securities.co.uk’ [please note the differing email suffix] and may be masking their caller IDs to appear connected to Reyker, Smith & Williamson or other intermediary providers.

  • We continue to communicate such approaches to the relevant authorities, including the FCA, and ask Clients to remain vigilant to such fraudulent communications.

  • • If you are in any doubt regarding the legitimacy of any communication regarding the special administration, please refer to the information provided on the dedicated webpage or contact client services directly on 0800 048 9512 or, alternatively, at either clientservices@reyker.com. Further information can also be found at https://www.fca.org.uk/consumers/protect-yourself-scams.
  • If you have lost money as a result of a scam, you should contact Action Fraud on 0300 123 2040 or visit www.actionfraud.police.uk.

Global update and the JSAs’ six-month progress report

  • June’s global update on the progress of the Special Administration has been added to the website (dated 12 June 2020) and can be found here. We will add further updates on a regular basis.
  • The JSAs’ progress report for the first six months of the Special Administration, being from 8 October 2019 to 7 April 2020, is available to view by clicking here

Return of Client Assets

  • As set out in the JSAs’ proposals, our preferred strategy was to affect a wholesale transfer of Client Assets to a single purchaser of the Company’s business and assets as this would be the most cost-effective and fastest way for Clients to regain access to their holdings.
  • Following the withdrawal, in early April, of the proposed purchaser’s offer for Reyker’s business and a wholesale transfer, we have been working towards identifying a replacement broker for a wholesale transfer or, alternatively, a collection of brokers for a series of partial transfers.
  • The JSAs have concluded all negotiations and discussions with a variety of potential and targeted regulated brokers and are now able to confirm that their strategy is to:
    • Transfer Custody Assets (being stocks and securities) by way of a series of partial transfers to no more than five brokers under regulation 10B and 10C of the Regulations, i.e. a Distribution Plan. This is a court-led process and is subject to the approval of the Creditors’ Committee and the Court to the Distribution Plan; and
    • Distribute Client Money to Clients by way of a separate process which is not subject to Court approval or availability.
  • It is considered that the above approach now represents Clients’ best interests and further detail is provided in June’s global update. 

Transfer of Custody Assets (i.e. stocks and securities)

  • The transfer of Custody Assets will require the Distribution Plan, a detailed legal document with accompanying asset schedules, which details the process by which the Custody Assets will transfer ensuring Clients’ rights are protected.
  • The return of Custody Assets will be undertaken by way of a series of partial transfers to no more than five regulated brokers under regulations 10B and 10C of the Regulations (as opposed to a wholesale transfer to a single purchaser).
  • The number of transfers to be undertaken has been kept to a maximum of five brokers in the interests of Clients and on account of complexity, cost and, particularly, timescales.
  • The Distribution Plan:
    • Deals with the return of Custody Assets (being electronic and paper-based stocks and securities) and Post Pooling Receipts (being dividends, interests, redemptions, etc. received in respect of Custody Assets following 8 October 2019);
    • Does not apply to Client Money held within the Client Money Pool (which crystallised on 8 October 2019); and
    • Requires the consent of the Creditors’ Committee (which includes the FSCS) and the Court.
  • For practical and commercial reasons, the identity of the five preferred brokers cannot be shared at this time.
  • The JSAs and their legal advisors are in the process of drafting the Distribution Plan in collaboration with the Creditors’ Committee and with input from the FCA, and there are a number of legal and practical matters to be considered prior to the JSAs submitting the desired application to Court.
  • Whilst the JSAs wish to submit an application in early course, the date of the hearing will ultimately be dependent on Court availability at that time.
  • In the event a hearing date is not scheduled prior to the Summer recess (which commences 1 August 2020), the JSAs’ advisors believe a very strong case could be made for the application to be heard as an urgent application during the Court’s summer recess. However, Clients should be mindful that this determination will ultimately be at the Court’s discretion.
  • Once the Creditors’ Committee have approved the proposed terms of the Distribution Plan and a Court application is made, the document and an explanatory statement will be made available for all Clients to view on this website.


Distribution of Client Money held as at 8 October 2019

  • The return of Client Money from the Client Money Pool (i.e. cash held as at 8 October 2019) does not form part of the Distribution Plan and can be achieved in accordance with CASS 7A by either:
    • Distribution: achieved by engaging with Clients and requesting confirmation as to where they wish their Client Money to be sent; OR
    • Transfer: achieved by transferring Client Money to a nominated broker alongside the transfer of Client’s respective Custody Assets, with the appropriate Client consents or waivers (this would likely require an additional application to Court to be heard at the same time as the Distribution Plan).
  • Given the widespread financial difficulties brought about by the ongoing Covid-19 pandemic and the preferences of the largest intermediary providers, the JSAs have decided to undertake a distribution of Client Money, which is not subject to Court consent and availability, with a view to expediting the return of Client Money held within the Client Money Pool.
  • The JSAs are preparing to pay an ‘interim’ distribution of Client Money as soon as possible and each Client with a Client Money balance will be written to over the coming weeks with further detail and instructions in this regard.
  • The distribution of Client Money will be paid in at least two tranches to Clients as, at the time of the first ‘interim’ distribution, the JSAs will need to retain sufficient funds as a provision to settle the anticipated costs of the special administration and unforeseen Client claims that may be forthcoming. This is not unusual and the JSAs still expect to return all Client Money to FSCS eligible clients and all Client Money, less their share of the costs, to all other Clients who are either not eligible or chose not to make a claim to the FSCS in due course.
  • In order to participate in the first interim distribution of Client Money, Clients must have submitted their claim to Client Assets held as at 8 October 2019 through the Portal (as per the JSAs’ letter dated 6 March 2020). Clients that have not yet submitted their claim on the Portal (or otherwise) are strongly encouraged to do so at the earliest opportunity. If this is not completed, Clients will not lose their entitlement to Client Assets, however, the distribution of Client Money (or part thereof) will be delayed.
  • The JSAs’ forthcoming letter will be sent to all Clients with a Client Money balance and provide further detail and instructions as to what needs to be done in order to participate in the first interim distribution of Client Money and by what date.
  • The development of the portal to accommodate this complex and sensitive data process is ongoing and letters will not be issued until development and testing is complete. Clients should continue to keep their log-in details safe and secure.
  • In the meantime, Clients that wish to check their claim submission status, can do so by logging in to the Portal and going to the ‘declaration’ page. 

Financial Services Compensation Scheme (“FSCS”)

As previously reported, the costs of pursuing Objective 1 of the Special Administration (i.e. the return of Client Assets) are paid from Client Assets and, therefore, Clients not eligible for or choosing not to claim FSCS compensation may receive a shortfall in the Client Assets to which they lay claim following the deduction of their share of these costs.

Our recent communications advised that the FSCS had exercised its power under COMP 3.2.1A of the FCA Handbook and will treat all Clients with Client Assets with a total value of less than £85,000 as at 8 October 2019 as if they have claimed compensation. This means:

  • All Clients with Client Assets totalling less then £85,000 as at 8 October 2019 have automatically been treated as having submitted a claim for compensation from the FSCS and they do not need to take any further action in this regard;
  • Clients who have Client Assets with a value equal to or greater than £85,000 as at 8 October 2019 will not be treated as having automatically claimed compensation from the FSCS and, therefore, were required to indicate through the Portal as to whether they wish to submit a claim for FSCS compensation or not.

Please note, the Portal automatically determines which of the above categories Clients are deemed to fall into as part of the ‘Declaration’ and claim submission process and Clients only see options that are relevant to their own holdings.

We have continued to work closely with the FSCS in order to streamline the process by which eligible Clients may receive compensation and would note:

  • Clients with Client Assets with a value equal to or greater than £85,000 as of 8 October 2019 and who have not yet submitted a claim to either Client Assets or for FSCS compensation should access the Portal and submit their declaration at the earliest opportunity. Although the Bar Date has passed, we are continuing to allow Clients to submit their claim for a further limited period of time; and
  • The JSAs wrote to the Company’s non-individual, corporate Clients who may not be eligible for FSCS compensation in March 2020 requesting that they complete and return an eligibility assessment form in order that the FSCS can make a final determination in this regard. Clients that have been asked to complete the form and not yet done so, should return it:

The FSCS can pay up to £85,000 per eligible Client for claims in respect of Reyker Securities plc (in special administration), including those in respect of their share of the Objective 1 costs. Further information on eligibility criteria may be found at https://www.fscs.org.uk/how-we-work/eligibility-rules/

Where Clients are either deemed to have claimed or, alternatively, select to claim compensation from the FSCS and it is subsequently determined that they are not eligible in accordance with the FSCS’ eligibility criteria, the JSAs will write to all such Clients to confirm the options available with regard to meeting their share of the costs.

Next steps

As highlighted in our most recent global update:

  • Clients that have not yet submitted a claim to Client Assets are very strongly encouraged to do so. Client that do not submit a claim may experience a delay in the distribution of their share of Client Money.
  • Corporate Clients that may not be eligible for FSCS compensation should complete the FSCS eligibility assessment form issued on 30 March 2020 and return it to reyker.securities@smithandwilliamson.com.

The JSAs and their legal advisors will:

  • Complete the terms of the Distribution Plan in collaboration with the Creditors’ Committee, and with input from the FCA, with a view to making an application to Court for the approval of the proposed transfer of Custody Assets to the five preferred brokers at the earliest opportunity; and
  • Finalise the development of the Portal and associated client communications with a view to writing to all Clients in the coming weeks to set out the process and timing of the first interim distribution of Client Money. 

Contact

The JSAs have a dedicated telephone and email address for Clients and Creditors. These are:

Please note, given the volume of enquiries being received, it is not possible for us to respond to everybody’s individual enquiries, however, best endeavors are being undertaken to provide all Clients and Creditors with the latest information at this website. Where queries relate directly to the agreement of Client claims, we are seeking to respond to Client enquiries received by email within 48 hours.  

For all press related queries please contact Mark Gee on 0207 131 4597.

The affairs, business and property of Reyker are being managed by the Joint Special Administrators who act as agents of the Company, without personal liability. Mark Ford, Adam Stephens and Henry Shinners are authorised to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales. Reyker remains authorised and regulated by the Financial Conduct Authority. FCA reference number 115308. Registered in England No. 01747595

Glossary

A glossary of key terms used within our Client and Creditor communications and published herein can be found here.

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