City of London corporate finance boutique Alexander David Securities is going into voluntary liquidation in the wake of a spate of issues, the FCA confirmed yesterday. The FCA had already ruled that the firm was “not a fit and proper person in relation to the regulated activities which it carries on or seeks to carry on.”
There had been seven decisions upheld by the UK Ombudsman against the broker and it had failed to pay the Ombudsman GBP 3900 in fees. There were still 32 open cases against Alexander David Securities, most of which were either at the investigation stage or had been referred to an Ombudsman for decision.
Assuming an average claim value of £41,858 for each claim based on previous cases, the total claim value is estimated to be approximately £1,339,470. The Ombudsman has previously upheld 85% of decisions against Alexander David Securities.
Banned from regulated activities
The FCA has imposed requirements on the corporate advisory firm, which means it must not dispose of any assets without the written consent of the UK regulator. Since 29 June 2020, Alexander David Securities had not been permitted to undertake any regulated activities, hold client money or assets nor issue or approve for third parties any financial promotions.
According to its own website, the firm had been led by chief executive and head of corporate finance David Scott, who was formerly a director of corporate finance at Lewis Charles.
The FCA said it was acting so money would be available to pay compensation owed by ADSL, including a so far unpaid redress awarded by the Financial Ombudsman Service, to those given unsuitable pension advice.
Alexander David Securities was incorporated on 30 November 2006. The firm was based in London and provided corporate finance advisory services which included initial public offerings, secondary fund raisings, mergers and acquisitions, and debt offerings. Its clients comprised corporate entities and fund managers. The firm had been authorised by the FCA to perform regulated activities from 30 January 2008.
Why did the FCA choose to act?
The FCA said it had become concerned that there was a present risk of “a dissipation of the remaining assets of Alexander David Securities to avoid paying complainants any redress.” The reasons for the regulator’s concerns lay in the fact that the balances in ADSL’s bank accounts had substantially decreased from £2,388,041 as at 16 December 2021 to £433,353 as at 26 April 2022 and that the broker had continued to refuse to make full redress payments to its customers.
The FCA noted that Alexander David Securities had previously appointed four appointed representatives, but that none of these companies were still acting under the company’s regulatory umbrella. Indeed, the last of these, OS Wealth Management, exited that arrangement in 2018.
Joint liquidators (BDO) have been appointed to wind up Alexander David Securities for the benefit of its creditors and will be writing to all known creditors shortly to explain what this means and how to make a claim. As part of the wind up of the firm, the ombudsman will be contacting its clients for permission to refer the issue to the Financial Services Compensation Scheme.