This day in history: Jan 20, 2015 – FCA issues statement on Alpari UK

The collapse of retail FX broker Alpari (UK) Limited was one of the main events to be remembered as a result of the SNB decision on January 15, 2015.

The company officially appointed joint special administrators from KPMG on January 19, 2015, with the UK Financial Conduct Authority (FCA) publishing its official stance on the matter on January 20, 2015 – exactly two years ago. The UK regulator’s announcement was pretty formal. It explained what the the Special Administration Regime (SAR) is and that Richard Heis, Samantha Bewick and Mark Firmin of KPMG LLP had been named joint special administrators.

A couple of weeks went by during which it became clear that clients with negative balances may have to repay the sums owed, whereas the others have to submit compensation claims. In terms of money, one of the first documents published on KPMG’s dedicated portal for the Alpari UK case, stated that at the date of the Joint Special Administrators’ appointment, there were segregated client money accounts totalling the equivalent of approximately £65.5 million.

Early in February 2015, the sale of Intellectual Property assets of Alpari (UK) Limited to Andrey Dashin was completed.

Starting from February 26, 2015, the Claims Portal was open to the first wave of clients.

A month later – on March 26, 2015, the Joint Special Administrators of Alpari (UK) Limited officially confirmed that an agreement has been reached for the sale of the client data to ETX Capital.

Then came the summer of 2015 and the first client money distribution, as well as the first progress report, which covered the period from January 19, 2015 to July 18, 2015. The administrators underlined the specific challenges they faced, not least because the broker had more than 100,000 clients, 82% of which were based outside of the UK.

The first progress report stated that, to date, Financial Services Compensation Scheme (FSCS) had taken assignment of 9,693 client claims and had paid compensation amounting to $36.6 million in respect of 8,660 clients.

Certain details regarding the sale of assets were published too, with house money totalling £7.8 million having been realised. Realisations had also been made from the sale of the intellectual property (£3.8 million), Alpari Japan K.K. (£1.7 million) and the initial receipt from the sale of the client data to ETX Capital Limited (£0.2 million).

The second progress report, which covered the period from July 19, 2015 to January 18, 2016, provided more details on the amount of compensation paid – FSCS had paid compensation of $48.3 million to 10,444 clients.

The second progress report also provoked some media reports concerning the KPMG fees. In an interview with FinanceFeeds, Samantha Bewick set the record straight. She refuted media reports alleging that KPMG had charged $15.1 million for its services to Alpari UK until that point. Ms. Bewick said to FinanceFeeds that only half of that figure had been charged.

The third progress report, covering the period from January 19, 2016 to July 18, 2016, said FSCS had paid compensation of $51.3 million to 11,751 clients.

The most recent documents on the case concern the efforts of the JSA regarding a final distribution to clients. This is set to happen in compliance with an order by the English High Court prescribing the procedure for closing the client money pool and organizing the money distribution. The initial information was that this final distribution was set to be made by July 24, 2017. However, one very significant client creditor had appealed KPMG’s part-rejection of its claim. As a result, a timetable has been set for the hearing, but the court is unable to hear the case until a date between May 9-11, 2017. That is why, the JSA are unable to distribute the remaining client money funds until after the judgement has been given.