Saturday 16 November 2019

Majority of Beaufort Security clients covered for return of £500m in assets

Administrators said fewer than 10 retail clients will face any costs.

The City of London (Jonathan Brady/PA)
The City of London (Jonathan Brady/PA)

By Kalyeena Makortoff, Press Association Chief City Correspondent

Clients of collapsed Beaufort Securities have been promised financial reprieve after a deal was struck to cover the costs of returning around £500 million in assets to customers.

Administrators for the stockbroker said an agreement had been reached with the creditors’ committee and Financial Services Compensation Scheme (FSCS) to cover 94% of the costs for returning assets to approximately 17,500 retail and corporate clients.

“The remaining 6% of costs will be borne by corporate clients, although this percentage may reduce as the distribution plan evolves,” joint special administrator and PwC partner Russell Downs said.

The maximum fee for returning those assets will be £10,000 each, with the vast majority of clients set to be covered by the FSCS.

“Fewer than 10 retail clients will face any costs exposure at all,” Mr Downs said.

There are around 17,000 retail clients and approximately 500 corporate clients who held funds or assets with the collapsed stockbroker.

The £500 million in assets set to be returned to clients is made up of both cash and stocks.

“The creditors’ committee support the development of the distribution plan, with the aim of receiving all necessary approvals in July before the intended block transfer of the majority of clients to a nominated broker in September,” Mr Downs added.

Beaufort Securities is still being investigated by the US Department of Justice over allegations that the group was involved in a securities fraud and money-laundering scheme.

The UK’s Financial Conduct Authority (FCA) declared the troubled City broker insolvent back in March after a financial assessment by the watchdog.

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