Clear(er) path to clients getting money from Brite Advisors

During May, lots of details came out showing what was happening with Brite Advisors’ receivership, and June’s court orders have provided instructions to interested parties on what to do. The court’s specific instructions now present a clearer picture of a route to beneficiaries receiving their cash, but some beneficiaries may be more complicated due to trustee’s status and opens the present to client on any distribution.

Pathway to getting money back to clients

The distribution of assets back to trustees, for the benefit of the pensioners and direct investors, from Brite Advisors Pty Ltd involves a few key steps that the receivers are going through. Here we explain the pathway that is outlined in some of the recent update documents:

  1. Reconciliation of Assets with Interactive Brokers (IB)
    • Process: The Receivers and Managers have been working on reconciling the assets held by Interactive Brokers. This involves obtaining full access to the Interactive Brokers accounts, ensuring that all assets and transactions are accurately accounted for. Viewing access has been granted to some accounts, and efforts are ongoing to secure complete access. The 5th June court orders included a requirement for Interactive Brokers to transfer Brite Assets and provide viewing access to accounts within 7 business days.
    • Goal: The aim is to manage beneficiary drawdown processes autonomously and facilitate the rebalancing of the Client Assets Under Management (Client AuM) model portfolios, which have been approved by the Court​​​​.
  2. Reconciliation of Beneficiary Interests
    • Previous actions: Receivers sought and obtained a direction from the Court to use 13 December 2023 as the date for calculating beneficiaries’ entitlements. This date reflects the initial appointment of the Receivers and Managers of Brite Advisors​. This means a date has been established to references the assets held at IB to the client records of individual positions.
    • Latest progress: The June Court Orders authorise the Receivers to communicate directly with beneficiaries to share the value of their investments as of 13 December 2023 once the reconciliation is completed.
    • What’s next: The significant next steps for reconciling beneficiary interests are securing and verifying data across AutoRek, Interactive Brokers, and Salesforce. The Receivers have access to AutoRek, which was effectively Brite’s internal client account database. Getting full asset visibility and then audit with Interactive Brokers to complete portfolio rebalancing. Lastly, reconstructing Salesforce data to provide beneficiaries with updated investment details will bring all the materials together to complete the reconciliation of the whole of the asset base (investments held at IB) against the paper records of every client. According to the March 2024, there are 2,031 beneficiaries with Brite Advisors Pty Ltd. This includes both direct investment and pension investment beneficiaries, as outlined in the detailed reconciliation report. Getting this much holdings data will be a forensic and time-consuming process, but it should be eased with access to all the data and visibility of the investment assets.
  3. Approved Distribution Method
    • Liquidation and Distribution: The primary method proposed for distributing the Client AuM is to liquidate the portfolio held on the Interactive Brokers trading platform and distribute the proceeds as cash to the trustees. This method is deemed the most efficient and cost-effective way to return funds to beneficiaries.
    • Consultation and Feedback: The Receivers will shortly begin consulting with beneficiaries and trustees to gather feedback and ensure the proposed distribution method balances the beneficiaries’ preferences with the receivers’ duties. A survey will be issued to collect this feedback and inform the Court’s recommendations​​​​.
  4. Distribution amount
    • Once the reconciliation of individual positions is made, we would expect the majority of assets to be distributed to trustees et al. There will be a provision (or a debit to the portfolio value, to put this in simpler terms) made on any holdings statement, which will reflect the shortfall in assets versus the client records. This was previously circa 10%, but there may be higher when considering the loan liabilities and use of client money for Brite Advisor fees. We would expect more detail on the distribution amount once #3 had made significant progress.

Trustees where pensioners may face further complexity in getting their money

Most clients will have a scheme, pension or trust where their investments are placed. The role of the trustee must be understood as any distribution from Brite Advisors will be returned to the trustee firm, where they should place it as cash in their client money bank account or hold it with a custodian if it is an asset distribution. Below, we explain that some clients may face additional difficulties with some trustees we believe had member monies with Brite Advisors.

Explainer of the parties and their role in a pension scheme
When you set up a pension, several key roles work together to manage and protect your retirement savings. At the heart of this arrangement is the trustee. Think of the trustee as the gatekeeper and legal holder of your pension. Their job is to ensure that everything is done in your best interest, following the rules and regulations. They oversee the entire pension setup and make sure that your funds are handled properly and securely.<br><br>

Next, we have the custodian. The custodian is like a secure vault where your pension assets are kept. They hold and safeguard the actual investments and assets that make up your pension. The custodian doesn’t make decisions about how your money is invested; instead, they ensure that your assets are safe and accounted for. Their primary role is to keep your pension’s assets secure, much like a bank holds onto your savings.<br><br>

Lastly, there’s the investment adviser. This person acts as a caretaker for you, the client. Their role is to provide advice on how your pension funds should be invested to help grow your savings over time. They work directly for you, offering guidance based on your financial goals and risk tolerance. The investment adviser doesn’t hold your money or make the final legal decisions, but they play a crucial role in planning and managing your pension investments to maximize your retirement benefits.

We understand Relay Pensions has members who had custody of their pensions with Brite Advisors. The Entities linked to Relay Pensions are now in Special Administration after action by the Gibraltar Financial Services Commission. These entities: Relay Administration Limited (Incorporation No. 112139), Corinthian Pension Trustees Limited (Incorporation No.. 110658), and Pantheon Pension Trustees Limited (Incorporation No.. 112310). The difficulty in this case is that the daily operations of the Trust Firm are no longer occurring with liquidation/administration, so once there are proceeds to be distributed back to your pension, there’s no one there to be in touch with. For anyone with money their pension with these firms, you may want to contact the Special Administrator at relay.comms@btguk.com

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