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Categories:Investments

Keydata in administration

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Hannah Stodell
Keydata Investment Services has today been placed into administration on the grounds that it is insolvent.

Following an application to the Royal Courts of Justice by the FSA, PricewaterhouseCoopers' Dan Schwarzmann and Mark Batten have been appointed joint administrators.

Keydata is an investment manager specialising in the design and distribution of structured products for individual investors.

The firm has been temporarily suspended while PwC assesses its financial position. While this happens the firm will be unable to pay out money to customers whose policies may mature in the next few days or who want to cash-in, transfer or cancel their investment.

In a statement on its money made clear website, the FSA says it is "too early to say" whether investors have lost any money and how long PwC's assessment will take.

Speaking to Money Marketing at 4.30pm this afternoon, PwC joint administrator and partner Dan Schwarzmann said the team was appointed a few hours ago and were desperately trying to get to grips with the business.

He said: “One of the priority items that we’re looking at is what is the position regarding funds that have been invested in by clients and is that protected. I hope to have an answer for that very quickly. The other priority is understanding the business so we can look to realise a good disposal of the business as quick as possible.

“In terms of the timeline for knowing whether money is protected? 24 hours. In situations like this it would be usual for the money to be protected but we just want to make sure that is the case."

A source close to Keydata says the firm does not agree with the FSA’s actions or believe the actions are in the best interests of consumers.

The source says Keydata offered an alternative route to the FSA to avoid administration, but this was rejected by the regulator. “Had it not been for the FSA’s actions there would not have been this present uncertainty to consumers nor any potential liability for the FSCS.

“We believe all underlying investments are performing inline with expectations and will deliver,” says the source.

The firm was marketing new structured products as recently as June 3 when it launched two FTSE-linked structured products.

Prior to being placed in administration, 85,000 retail investors were invested with the firm, according to a FSA spokeswoman.

The firm's accounts for the year ended September 30, 2008 show it made a profit before tax of £1,414 compared to a £988,270 profit the previous year.

Keydata's first product was launched in 2001 and it has £2.8bn under management as at March 31, according to the firm's unaudited figures. It operates from three locations in London, Glasgow and Reading.

In addition to launching over 50 structured products, Keydata has launched six venture capital trusts and provides third party administration services for other financial institutions.

According to PwC the following VCTs are separate legal entities and not subject to the administration: Keydata AIM VCT plc, Keydata AIM VCT 2 plc, Keydata Income VCT 1 plc and Keydata VCT plc 2.

Investors, IFAs and other interested parties can contact PWC for further information on www.pwc.co.uk/KIS and on its helpline 020 7804 4424.

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