View more on these topics

Administrators detail litany of failures at collapsed DFM

Directors were unable to reconcile client assets or give access to trading platforms as administrators connect British Steel firm to collapsed DFM

Slipping through the cracks 620x430.jpgAn administrators’ report has shed light on a host of failings that led to the collapse of discretionary fund manager Strand Capital.

London-based Strand, which had around 3,000 clients and £86m in funds under management, was put into special administration back in May.

An administrators report released today shows that IFAs are being contacted, along with Sipp providers, to verify each of their individual holdings, after a director was unable to give the administrators a list of assets held or client names.

The administrators say they understand that commission payments are due to Strand, but have not been able to value the amount.

They have also not been able to identify who two Euro bank accounts worth just over €6,000 belong to or what they are for.

Strand had insufficient funds to pay the premiums in the run up to its collapse, so could not extend its professional indemnity insurance to cover claims in administration.

The administrators add that they have been in regular contact with the FCA Financial Services Compensation Scheme. If clients do not end up receiving the entirety of their investment back in the administration process, the shortfall will be automatically funded by the FSCS up to its £50,000 limit.

At one point in the run up to the administration, “nobody remained in the business who had logon details to the trading platform,” the report reads.

Inside a DFM administration

Asset management conglomerate Optima Worldwide Group purchased Strand in 2014, and made an investment into the company to develop an algorithmic trading platform.

This went live in February 2016. Before then, Strand Capital only arranged investments in Optima bonds, but these tailed off “as alternative investment products were introduced by the company” the administrators say.

A company called 5Aplha provided IT services to Strand. The administrators say that around November 2016, a “significant portion” of Strand’s investments were moved to the Irish domiciled 5Alpha Adventurous Fund and/or Conservative Fund.

The administrators also note a link with Kent-based DFM Gallium Fund Solutions. As reported yesterday, Gallium is also linked with a number of high-risk British Steel Pension Scheme transfers.

The administrators report reads: “At the time of the appointment, circa £8.5m of funds was not fully under the control of the company. This was of concern, and considerable resource was dedicated to regularising the position. This involved liaising with a number of banks and other parties, including Gallium. The position of funds has now been regularised.”

Gallium is not mentioned anywhere else in the 45-page report.

Cost incurred by those working on the administration up to the point the company formally entered liquidation alone have come to more than £245,000. These will be paid out of client assets. Between 17 May and 16 November last year, at least half a million pounds in time costs were incurred.


John Lawson: 2017 vs 2018: Two contrasting years for pensions

Advisers should be prepared for a busy year ahead Anyone who works in pensions is likely to look back on 2017 as one of the quieter years for legislative and regulatory change. That is not to say we have all had a chance for a breather, of course. No matter what area of pensions you […]


Mifid II: The unintended consequences for stockpickers

Today sees the start of the new Mifid II requirements for the investment management industry, one of the EU’s most ambitious packages of financial reforms. Designed to provide greater investor protection and transparency across all asset classes, the directive represents the most notable change in UK equity capital markets since the ‘Big Bang’ in 1986. […]


Fidelity platform business posts £16m loss

The company that runs Fidelity’s platforms has posted a loss of £15.9m for the 12 months ended 30 June 2017. Annual accounts posted to Companies House on 22 December for Financial Administration Services, which is the company that operates FundsNetwork and Fidelity Personal Investing, show the loss grew from £15.5m in 2016. The accounts document […]

Bank advice: Who offers what?

As banks prepare to re-enter the financial advice market, Money Marketing looks at what services are actually on offer. Bank advice gets personal Editor’s note: Banks lack trust as they move from guidance to advice

The Investment Clock: Keep calm and Macron!

Trevor Greetham, Head of Multi Asset In a marked contrast to the surge in risk sentiment that followed President Trump’s election in November, markets greeted Emmanuel Macron’s victory in the French presidential election with satisfaction and relief, rather than euphoria. After rallying strongly on opinion polls that accurately predicted the outcome, the euro held onto […]


News and expert analysis straight to your inbox

Sign up


There are 3 comments at the moment, we would love to hear your opinion too.

  1. Makes you wonder too that regardless of the things that went-on if the losses clients might have incurred in the mess (except investment losses which are a different thing) exceed the £500,000 of costs incurred by the administrators meantime….

  2. I think there’s a bit more to come out yet. All sorts of conflicts of interest, and a peculiarly strange attitude by OWG to it’s feeder fund subsidiary.

    Let’s get the tin opener out and look into the contents of these bonds.

  3. So much for an orderly wind-down. There should have been sufficient capital to ensure key staff were retained to run down the business and make sure sufficient access was maintained to reconcile and transfer the business or return the assets to customers.

Leave a comment