IE Group, the boutique cash manager, will need to find a new 25 per cent owner after Sonray Capital entered administration last week, however it claims the broker’s collapse has proved its operating model protects investors’ assets.

IE Group, which was founded this year by former NAB Asset Servicing sales chief Patrick Liddy and associates, is the daily cash manager for Pegasus Asset Management, an absolute return manager running $10 million on behalf of retail investors.

Pegasus used Sonray to execute its long/short trades, however under the IE Group operating model its cash was segregated, and can’t be touched by the administrators who’ve now locked up the broker’s Collins Street offices.

“This means that the Pegasus unitholders’ money will not be caught in the pending dispute over the Sonray omnibus holding. These cash assets are safely housed under Pegasus’ name in one of the banks that’s a member of IE Group’s panel,” Liddy said.

Liddy added that Pegasus’ investors were also receiving a higher interest rate on their uninvested cash thanks to the IE Group model, which can dynamically shift between the best ’11am’ rate being offered by its six panel banks.

“They’d been getting 1.7 per cent from their custodian, now we’re getting them above the official cash rate,” Liddy said. “We believe that cash should be segregated, controlled and monitored on a daily basis.”

IE Group is seeking to recover Sonray’s equity stake from the administrators and find new backers. The chair of IE Group is Greg Bright, a founder of Conexus Financial, which publishes this newsletter.