John Dance's WealthTek run with 'significant' shortfall in client assets for 'prolonged period of time'

WealthTek LLP, the company of prominent owner John Dance that was shut down in April following the discovery of “serious regulatory and operational issues”, was run with a “significant” shortfall in client assets for a “prolonged period of time”, according to administrators.

The special administrator appointed by the high court has provided a six-month update on its investigation into WealthTek, which also traded as Vertem Asset Management and Malloch Melville, in which it detailed that there were a “number of issues with the accuracy of the LLP’s books and records”.

Fund manager WealthTek ceased trading on April 4 after the Financial Conduct Authority (FCA) suspended the company with special administrators subsequently appointed. In addition, a £40 million worldwide freezing order was placed on the assets of Dance.

A black hole in client funds of £81.4m was initially discovered with that figure revised down to £80.4m in a report released on Friday which covers the period between April 6 and October 5, 2023.

As part of the investigation by the joint special administrators (JSAs), analysis of c.52,000 transactions across 75 bank accounts held by WealthTek for a 12-year period was conducted. The administrators said this “assisted…in developing the JSAs’ understanding of how the shortfalls have arisen.”

However, the report added: “Due to reasons of confidentiality and to avoid prejudicing any actions that the JSAs may identify against any third parties, the JSAs are unable to provide any further information in relation to the funds flow analysis at this time.”

The report also detailed how there had been a “significant” gap between the assets listed as being held by WealthTek on its investment platform and the tangible assets under its stewardship for an extended period.

“The JSAs’ investigations indicate that the LLP has operated with a significant shortfall in client assets for a prolonged period of time,” the report stated. “This has contributed to a number of issues with the accuracy of the LLP’s books and records.

“During the [administration] period the JSAs have therefore been required [without waiving privilege] to obtain advice from leading counsel on a number of issues arising from their investigations into the books and records, in order to determine how they impact on [clients].”

Prior to the action against WealthTek, Dance had been one of racing's most prominent owners, campaigning the likes of Laurens and Bravemansgame and sponsoring races such as the Group 1 Futurity Trophy at Doncaster and the Eider Chase at Newcastle.

In September, the BHA placed an “interim suspension” on horses owned by Dance and his wife, Jess, who had been running under the banner of Coverdale Stud, to prevent them from racing.

The suspension also applied to horses owned by the Titanium Racing Club, to which Dance provided financial support and was formerly president. The suspension is understood to relate to the alleged non-payment of funds following the sale of the Titanium-owned Sacred Angel.

James Horton, who had previously been private trainer to the Dances and had been due to move into the owners’ refurbished Manor House Farm in Middleham, also quit his role in September and announced his intention to set up on his own in Newmarket.

Dance has not spoken publicly since WealthTek ceased trading. In its last update in September, the FCA stated Dance remained under investigation for potential regulatory breaches relating to client funds and custody assets, as well as the possible criminal offences of fraud and money laundering.

Read these next:

James Horton quits as private trainer to John Dance and will relocate to Newmarket 

John Dance horses banned from running again after BHA reveals further concerns 'have since come to light' 

Non-payment of funds to racing club members alleged to be behind decision to block John Dance horses from running 

The Front Runner is our unmissable email newsletter available exclusively to Members' Club Ultimate subscribers. Chris Cook, a four-time Racing Reporter of the Year award winner, provides his take on the day's biggest stories and tips for the upcoming racing every morning from Monday to Friday. Not a Members' Club Ultimate subscriber? Click here to join today and also receive our Ultimate Daily emails plus our full range of fantastic website and newspaper content.