The FCA has launched a criminal investigation into Newcastle-based wealth manager WealthTek LLP following the discovery of an £81.5m gap in the firms’ finances.

To enable the criminal probe to take place, the FCA has secured a High Court order pausing its civil investigation into the firm and owner John Dance to allow it time to investigate “suspected criminal offences by Mr Dance.”

The regulator has already been investigating the firm over suspected “serious regulatory breaches.”

The FCA says the pause will last 12 months.

Apart from being the founder of WealthTek Mr Dance is also a leading figure in British horse racing.

His Honour Judge Baumgartner, sitting as a judge of the High Court, granted a 12-month pause in the FCA’s civil case against Mr Dance and WealthTek LLP on 1 March. 

The FCA said its investigation into suspected criminal offences in respect of WealthTek LLP and Mr Dance continues. It says progress in its investigation has led it to focus resources on suspected criminal offences but it retains the option to restart its civil case.

A Restraint Order granted on 8 November against the firm remains in place. The order requires assets to be preserved to make them available for a future confiscation order, which can only be made following a criminal conviction, the FCA said.

The Special Administration of WealthTek LLP ordered by the High Court on 6 April 2023 also remains in place. The British Horseracing Authority remains responsible for matters relating to Mr Dance’s participation in horse racing, the FCA said.

Administrators BDO LLP last year said they had uncovered an £81.5m gap in WealthTek’s finances.

In April last year 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.

Vertem is an independent investment manager based in Newcastle upon Tyne, with clients 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 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 last year 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.