Beaufort Securities administration could cost £100m
The administration of collapsed stockbroker Beaufort Securities could cost as much as £100m, its administrator warned.
Audit firm PwC confirmed that in the worst case scenario the administration process could cost anything between £80m and £100m over four years.
The High Court appointed PwC’s Russell Downs, Douglas Nigel Rackham and Dan Yoram Schwarzmann as joint administrators last month.
Read more: Administrators freeze £800m in Beaufort Securities assets
PwC said that costs it faces include its fees and fees for legal advisers, property costs, spending on IT infrastructure and the wages of 37 retained Beaufort staff.
Downs said: “We have now completed our preliminary valuation and this has identified some illiquid, thinly traded securities and some potentially nil value holdings. Company estimates used previously to calculate the worth of assets were not reflective of current market values.
“In May we will continue with a distribution for 2,700 clients with small cash balances and will also collaborate with Financial Services Compensation Scheme (FSCS) where required.”
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The FSCS is the UK’s compensation fund of last resort for customers of authorised financial services firms.
It protects investments of up to £50,000 per person for firms declared to be in default.
Beaufort collpased in March after the Financial Conduct Authority (FCA) suspended all regulated activities at the firm following an indictment of the company in a $50m (£35m) fraud and money laundering case by the US Department of Justice (DoJ).
The DoJ alleges the defendants used “pump and dump” schemes to manipulate share prices, before trying to launder the proceeds of the fraud through the purchase of a Picasso painting, “Personnages, Painted 11 April 1965” in the name of an undercover US agent.