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Beaufort clients with more than £50k risk losses

Beaufort clients with more than £50k risk losses

Clients of bust discretionary fund manager (DFM) Beaufort Securities who invested more than £50,000 with the firm look set to lose money. 

Beaufort Securities was shut down by the Financial Conduct Authority (FCA) in March. The regulator declared the company insolvent, and shortly after an investigation was announced by authorities in the US into Beaufort, amid allegations of money laundering.

The FCA had been investigating the company prior to the US authorities becoming involved.

PwC has been appointed as administrator of the firm to deal with wind down of the company.

FTAdviser understands 2,700 clients of Beaufort who had £2,000 or less managed by the company can expect to be paid out in full in May, by the industry-funded Financial Services Compensation Scheme (FSCS), which has now declared Beaufort officially in default.

But for all other clients there will be a so-called 'distribution plan'.

Those with £50,000 or more invested - which is the limit of the FSCS safety net - are more likely to lose some of the money they had with Beaufort.

This applies to about 700 clients of the firm.

In a letter to clients of the defunct firm, PwC said it, as administrator will be paid first, as is normal under company law, meaning investors will only see their money returned if there is any left after PwC's bill has been settled.

It made clear client assets are intact, that is, no client money is missing.

But PwC also said the assets owned by clients are typically not liquid, which will make it more difficult to sell them for the value they are held at in client accounts, and will take longer to sell.  

Shareholders in the company are likely to lose all of their money as their will be negligible value left.

Beaufort was a stockbroker that specialised in AIM shares, as well as a discretionary fund manager.  

David.Thorpe@ft.com

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