Structured product provider Merchant Capital is awaiting news on the implications for client monies after the FSA suspended Pritchard Stockbrokers authorisation.
In a market statement, parent Merchant House Group says it “cannot at this time determine whether clients of Merchant Capital may suffer some economic loss”.
The announcement represents an about-turn after it had earlier in the week claimed it did not believe “the group or any of its clients will suffer economic loss” as a result of the FSA action.
The FSA announced earlier this week that Pritchard Stockbrokers, which holds client monies for Merchant Capital’s structured products division, had been told not to carry on any regulated activities by the FSA.
Merchant House Group had earlier in the week said it was “in the process of making arrangements for the handling of client monies with alternative providers”.
The FSA took action based on “serious concerns” that Pritchard Stockbrokers had “failed to arrange adequate protection for clients’ assets when it was responsible for them” and “allowed client money to be used on Pritchard’s own account and not that of clients”.