The FCA has secured a Restraint Order under the Proceeds of Crime Act 2002 against collapsed Newcastle-based wealth manager WealthTek as a criminal and regulatory investigation continues.

The order indefinitely freezes the assets of the firm and makes them available for a future confiscation order in the event of a criminal conviction.

The FCA is conducting a regulatory and criminal investigation into WealthTek and its principal partner, John Dance, which includes potential regulatory breaches relating to client money and custody assets, and criminal offences of fraud and money laundering.

Administrators BDO LLP said earlier this year they had uncovered an £81.5m gap in the firm’s finances.

The new order replaces an earlier worldwide asset freezing order with the Restraint Order.

The Restraint Order allows Mr Dance, principal of WealthTek and a major name in UK horse racing, to continue claiming reasonable living and business expenses.

The FCA says it is taking “all necessary steps” to secure an appropriate outcome for consumers. It says the British Horseracing Authority (BHA) remains responsible for matters relating to Mr Dance’s horse racing activities.

The regulator said in its latest regulatory statement this week that it is taking action to protect consumers following the identification of serious regulatory and operational issues at WealthTek Limited Liability Partnership (WealthTek).

Mr Dance is one of British horse racing’s best known owners. The BHA has banned horses associated with Mr Dance from running under the Coverdale Stud or Titanium Racing banners.

In April the FCA ordered WealthTek Limited Liability Partnership to cease all regulated activities following the discovery of regulatory and operational issues.

WealthTek (FRN: 832264) is an FCA-authorised and regulated wealth management firm which provides discretionary, advisory and execution-only services to its retail clients. WealthTek also trades under the names of Vertem Asset Management and Malloch Melville.

Northumbria Police, working with the FCA, arrested a man earlier this year in connection with the investigation. He has been interviewed by the regulator under caution.

The regulator took steps earlier this year, with the High Court, to appoint Shane Crooks, Mark Shaw and Emma Sayers of BDO LLP as interim managers to take control of the firm. 

Vertem is an independent investment manager based in Newcastle upon Tyne, with a client base across the UK. Founded in 2010 by John Dance, Vertem specialises in creating bespoke investment portfolios for professional clients, private individuals, charities and pension funds. The firm works both directly with private clients and via intermediaries including IFAs.

Malloch Melville is an Edinburgh-based wealth manager and stockbroker offering model and bespoke discretionary management. It was founded in 2015 by Jeremy Balfour-Melville and Thomas Malloch. The firm creates investment solutions for financial advisers, private individuals, family trusts, corporates, IHT portfolios, GIAs and SIPPs/SSAS.

In September customers of collapsed Newcastle-based wealth manager WealthTek were told they were likely to have any losses refunded by the Financial Services Compensation Scheme up to the scheme’s £85,000 limit per person.