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Beaufort Securities: battle to recover £700m from collapse begins

Beaufort Securities: battle to recover £700m from collapse begins

Administrators for collapsed discretionary fund manager (DFM) Beaufort Securities will try to return nearly £700 million of client assets after the firm fell into administration last Friday.

The Financial Services Compensation Scheme (FSCS) said it is working 'as quickly as we can' to understand what this might mean for Beaufort's customers.

But IFAs could face claims too after Beaufort Securities wrote to clients encouraging them to claim against advisers over its own investment products.

The firm's collapse came as the United States Department of Justice (DOJ) published an indictment last week in which Beaufort Securities and other companies and individuals, were charged with 'securities fraud and money laundering violations.’

The High Court appointed PricewaterhouseCoopers (PwC) as administrators of Beaufort Securities Limited and special administrators of Beaufort Asset Clearing Services Limited after an urgent application by the Financial Conduct Authority (FCA) last week.

The FCA later revealed the United States Department of Justice (DOJ) published an indictment last week ‘in which Beaufort Securities in addition to other companies and individuals, has been charged with securities fraud and money laundering violations.’  

The firm’s collapse comes just over a year after Wealth Manager's sister title New Model Adviser® first revealed its issues with the FCA which resulted in a permission restriction to its DFM business. 

In a statement on the administration of Beaufort Securities, PwC said the wealth firm had 14,000 pensions and ISA clients who had invested £664 million of client assets and £37 million of client money.

Nigel Rackham, joint administrator and PwC director, said: ‘Our key priority is to safeguard the firms’ custody and client money holdings held for their clients. Once these positions are under our control and we have secured important trading and client data, we can start planning for the return to clients. However, this is likely to take some time.

‘The appointment of administrators, following the firms’ insolvency, will inevitably cause inconvenience and hardship to the firms’ clients and we will be working with relevant authorities to minimise that.’

Claims bill

The FSCS meanwhile has said it is working with PwC ‘to understand what this might mean for these firms’ customers’.

‘We will work as quickly as we can to provide some certainty for customers, and will provide further updates on our website as more information becomes available,’ the FSCS said in a statement.

Last October New Model Adviser® also revealed that Beaufort Securities had written to its clients encouraging them to claim against their IFAs over its own investment products. 

The firm directed clients to use claims firm Legal Force to see if they have grounds for a compensation claim against their adviser for recommending they invest in Beaufort. At least 10 advisers are known to have used the investment firm.

You can read more about the indictment which the DOJ published about Beaufort Securities and individuals at the firm here.

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