KPMG Update: Shortfall of Alpari UK client funds

23 March, 2016 | AtoZ Forex – The longstanding case of Alpari UK bankruptcy and the consequent administration is now about a year old. Appointed special administrators, KPMG has released a new update regarding the Alpari UK client funds. The appointed special administrators reported a shortfall of $19.8 to $21.7 million in Alpari UK client funds. KPMG expects that only $76-$78 million will be returned to ex Alpari UK clients, when all procedures has been followed through.

Only 49.9 million had been returned

The special administrators now estimate the total client funds recovered to date at $98,244,193, which includes the funds held at e-Wallet providers that lend their services to Alpari UK. These funds held at the e-Wallet providers, did not fall under the Client money segregation legislation. As shown in the KPMG update, all costs incurred in the Special Administration in the period to 18 January 2016 have been allocated between the “Client and House Estates” based on the methodology previously agreed.

Hence, at the 18th of January 2016, it has resulted in a cost allocation of 74.3% to the Client estate and 25.7% to the House estate. Meaning that to date, only $49.9 million had been returned to ex Alpari UK clients.

Why is there such a shortfall?

The shortfall in Alpari UK client funds is due to the allocation of fees for Administrators. KPMG itself is the largest party to receive such a fee to conduct the research. In total the Administrators’ fees are estimated $9.8 to $11.4 million, yet much is dependent on how much work is still required.  

Hence, it seems like that ex Alpari UK clients will get back around 80 cents on one USD from the Alpari UK bankruptcy. Yet, former Alpari UK clients with trading accounts of less than £50,000, have more luck. Considering that the KPMG foresee that these traders will probably get most of their funds returned from the FSCS scheme.   

Client compensation in the form of dividend payments?

Following an earlier released report concerning Alpari UK client compensation in the form of dividends to preferential creditors, the joint special administrators (JSA) later released another update regarding unsecured creditor dividend back in December.

The JSA has decided to make a payment of 14 pence in the £ (GBP) to unsecured creditors whose claim has been agreed. These clients must have also fulfilled all necessary Know Your Client (“KYC”) checks. Clients who did not pass the KYC test for some reason should have been contacted by JSA by now, while creditors due for the payment will be notified via letter or email.

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