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  • FIRST POST
    • justme111
    • By justme111 9th May 18, 12:49 PM
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    justme111
    collapse of Beaufort - how is it different to investment platforms we use
    • #1
    • 9th May 18, 12:49 PM
    collapse of Beaufort - how is it different to investment platforms we use 9th May 18 at 12:49 PM
    The question may be silly as I don't know much about the topic of investments and legislation.
    If a broker Beaufort securities went into administration and the money invested through them can be used for admin fees what is to stop the same happening with any platform we use?
    http://m.citywire.co.uk/money/sharesoc-blasts-pwcs-incredible-100m-beaufort-fee/a1117484?ref=citywire-money-latest-news-list
Page 2
    • dunstonh
    • By dunstonh 14th May 18, 11:23 AM
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    dunstonh
    FSCS are bought and paid for by the finance sector.
    The FSCS is not owned by the finance sector. It is financed by levies on regulated firms doing regulated activities (not unregulated firms). It is effectively the good firms paying the costs to cover the bad.

    From what I have seen so far they are a shambles designed to frustrate and confound the victims of the finance sector rather than to protect us from fraud.
    The FSCS is not there to protect you from fraud. It is a compensation scheme. Not a regulator.

    They have to check things thoroughly and there will be a lot of unknowns at this stage. Especially as some of the investments done by the firm were unregulated and do not get FSCS protection.

    Many clients are facing huge losses - often a large percentage of their retirement investments.
    I am always amazed why some people go off the mainstream with so much of their wealth.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • nrsql
    • By nrsql 14th May 18, 5:55 PM
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    nrsql
    I suspect they locked everyone out of the system because they couldn't be certain it was secure.
    First thing an investigator will do is make sure the data doesn't change while they take an image.

    Account view access could be set up so that someone could get admin access to the system if they knew the route.
    • Col Jessop
    • By Col Jessop 15th May 18, 11:17 AM
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    Col Jessop
    The FSCS is not owned by the finance sector. It is financed by levies on regulated firms doing regulated activities (not unregulated firms). It is effectively the good firms paying the costs to cover the bad.

    You claim the FSCS is not bought and paid for by the finance sector. You then go on to explain that it is indeed funded by the finance sector.

    There are lots of industry funded organisations out there. The FRSA was a prime example in the charities sector. They were shut down after high profile embarrassing decisions always in favour of the fundraising sector and at the expense of UK citizens - particularly vulnerable people.

    Currently we have the FRSA, the FCA and the FCA's nominated administrators having cosy meetings to decide how much of Beaufort investors money they are going to take and how little money they can get away with offering the victims of Beaufort's fraud aided and abetted by the FCA. If it wasn't for the USA protecting their investors Beaufort would still be scamming us fully regulated by the FCA.

    PWC and the FCA and the FSCS were met with anger at a recent meeting were PWC looked to take 20% of the remaining assets / cash from victims of Beaufort and the FCA. There are now a few campaigns running. I have also received many PMs from people terified at the level of losses they are facing.

    These people acted in good faith. They invested their money via an FCA regulated business. The FCA were aware of the fraud and of the investigation by the USA government. They did nothing to protect UK citizens who continued to invest with Beaufort in good faith as they were reassured by the FCA and the Financial Ombudsman and the FSCS that they were protected.

    The FCA are tasked with ensuring the integrity of the finance sector. They are tasked with ensuring that the investing community have faith in the organisations they regulate. This fiasco has demonstrated that the FCA is not fit for purpose and that UK institutions cannot be trusted with UK citizens savings, retirement plans.

    Money has been fruadulantly removed from people who invested in good faiths savings / retirement plans. The FCA, FSCS and PWC conspire to add more financial misery to the victims of fraud. They deny victims access to their accounts. This is not offering protection or reassurance to the investment community. The FCA are busy protecting the interests of the finance sector.

    We really need police involvement and an investigation into missing cash and assets. And we also need police involvement into why the FCA allowed criminal fraud to continue at the expense of UK citizens investing in good faith in an FCA regulated business.
    • Col Jessop
    • By Col Jessop 15th May 18, 11:23 AM
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    Col Jessop
    Beaufort victims were locked out of the system immediately. The FCA were actually involved in the upgrading of Beaufort's business systems. The FCA put a temporary stop on Beaufort carrying out transactions on the previous system in 2017. The FCA allowed Beaufort to start carrying out transactions on their system again when the new business system was implemented. This delivered the two-tier system. That would suggest that the FCA approved a system that it now believes to be unsafe.
    • Col Jessop
    • By Col Jessop 15th May 18, 11:25 AM
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    Col Jessop
    ShareSoc. There are now a few campaigns running. ShareSoc looks like the most structured. This might offer some hope for those over the £50K limit of the FRSA and others who disagree with the secondary financial punitive from PWC, the FCA and the FRSA.
    • dunstonh
    • By dunstonh 15th May 18, 11:46 AM
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    dunstonh
    You claim the FSCS is not bought and paid for by the finance sector. You then go on to explain that it is indeed funded by the finance sector.
    The FSCS is put in place through legislation. The scheme is underwritten by the treasury. Taxpayers have the ultimate liability but to avoid taxpayers footing the bill (other than through loans) the cost of the scheme is passed on to regulated firms by payment of a levy.

    So, the scheme is not bought by the financial companies. Financial companies have no say in the scheme. Your suggestion was that the FSCS was in the pocket of the financial firms when it is nothing of the sort.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Col Jessop
    • By Col Jessop 15th May 18, 1:10 PM
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    Col Jessop
    dunstonh, the FSCS themselves state that they are not funded by the taxpayer. They are funded by the finance sector. Effectively bought and paid for.

    What the victims of Beaufort are experiencing is stonewalling from the FCA, PWC and the FSCS. That is not acting in the best interests for the taxpayer.

    The FCA knew about the criminal fraud and did not inform the victims of the fraud. Instead it allowed the victims to continue putting money into Beaufort and worse gave Beaufort time to commit further fraud. The FCA were fully engaged with Beaufort and the USA Government investigation from at least 2017.

    Rather than allowing the victims access to their accounts the FCA, PWC and Beaufort staff locked the victims out of their accounts immediately upon the announcement of the criminal charges and the administration process. There is something very wrong with that. The accounts have two levels of access. One is view only. The other is transactional and protected by 2 Factor Authentication.

    We have the FCA who are in a compromised position regarding their management of the Beaufort criminal fraud, and we have the FSCS - who are funded by the Finance Sector deciding who gets what. Throw PWC into the mix looking to maximise their profit from the administration process and you have a second punative financial action being carried out on the victims.

    Press Release 104 !!!8211; ShareSoc demands fair treatment for Beaufort clients
    The liquidation of Beaufort Securities on the FCA!!!8217;s instruction is targeting the ring-fenced property of thousands of UK private investors, many of whom are now facing losses of up to 40% of the value of their holdings. The liquidator!!!8217;s proposals bring into question the whole system of regulatory and legal protection of investors in the UK.
    The Financial Conduct Authority (FCA) declared Beaufort Securities Limited (BSL) and sister company Beaufort Asset Clearing Services Limited (BACSL) insolvent on the 2nd March 2018 and PwC were appointed as administrators of BSL and special administrators of BACSL.
    On 15th March, PwC confirmed that the ringfenced property of the Group!!!8217;s clients was held appropriately in accordance with FCA requirements, being approximately £50million in segregated client money accounts and around £850million in client-owned securities. On the 12th April, PwC noted that client money and client assets were, as at the date of administration, substantially complete save for a very small number of isolated deficiencies. However, the initial estimate of £850 million client assets was reduced to £500m as a result of illiquid / nil value positions. The special administrator stated that the majority of client asset returns will commence September 2018 at the earliest and that around 700 clients with assets valued over £150,000 may experience a loss up-to a maximum of 40% on their ring-fenced assets!
    PwC is proposing to charge an incredible £100 million for the wind-down over a period of 4 years. They have provided no justification of either the amount or timeframe for the simple task of transferring an electronic registry of client assets/money to one or more replacement brokers.
    Over 14,000 clients invested through Beaufort Securities, an FCA regulated entity, on the assurance that their assets were firewalled per FCA rules precisely to protect them in the event of the broker!!!8217;s insolvency. The suggestion that PWC as Special Administrator can seize client property and treat the owners as creditors of the failed entity makes a mockery of regulatory protections for investors in the UK.
    The FCA seems to have allowed Beaufort Securities to continue trading while the FBI carried out an undercover investigation, apparently putting the interests of the FBI ahead of those of UK investors. This calls into serious doubt the FCA!!!8217;s priorities and the regulator!!!8217;s role in protecting domestic savers.
    ShareSoc is determined to defend the interest of Beaufort clients, and the interests of UK shareholders in general, whose shares are held in nominee accounts and are therefore similarly exposed to the insolvency of their brokers.
    ShareSoc has launched a campaign with the primary purposes of mounting a legal challenge to the current administration proposals, specifically:
    Refuting the Special Administrator!!!8217;s right to seize ringfenced client property
    Ensuring proper separation of the liabilities of BSL from those of BACSL
    Questioning the Special Administrator!!!8217;s cost and time estimates in relation to the wind-down of BACSL
    Seeking a transfer of the business of BACSL to an alternative custodian
    Reviewing the actions and motivations of the FCA in this matter
    Lobbying for legislative change to ensure that assets in custody are properly protected
    Renowned FT writer and private investor, John Lee says:
    !!!8220;I am very happy to endorse the thrust of ShareSoc!!!8217;s campaign. We were all shocked to discover the seeming vulnerability of clients!!!8217; funds when we thought that they were ring-fenced and protected. This loophole surely has to be closed!!!8221;.
    • dunstonh
    • By dunstonh 15th May 18, 1:54 PM
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    dunstonh
    dunstonh, the FSCS themselves state that they are not funded by the taxpayer. They are funded by the finance sector. Effectively bought and paid for.
    Where does it say they are bought for the finance sector?
    Which financial companies own the FSCS?

    The FSCS also state "Where necessary,FSCS can also borrow funds commercially or from HM Treasury. " and its accounts show the loan interest and the loans from the Treasury.

    So, where does the Treasury get its money from?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Col Jessop
    • By Col Jessop 16th May 18, 8:03 AM
    • 16 Posts
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    Col Jessop
    The claim portal process is a farce - in fact it is nothing more than a state sanctioned scam.

    Anyone making a claim is presented with a sparse statement relating to the cash balances and asset balances in their accounts. All clients are still locked out of their accounts. By escalating to PWC and the FCA at a senior level I was sent a partial snapshot of my accounts. More information than other victims of Beaufort and the FCA are being provided with. It highlighted a potential theft of cash from my accounts.

    I have now requested a full breakdown of transactions on my account, dividend payments, share purchases, deposits, withdrawal. The requests are being ignored by PWC.

    The claims portal has an aggressive days until bar date countdown clock. This is a clear attempt at mugging victims of Beaufort and the FCA into accepting unverified statements of the balance of their accounts.

    The victims of Beaufort and the FCA were locked out of their accounts immediately on the announcement of the administration process. We are still being denied access to our own financial information. This is not a fair and just process.

    It is worth noting that Beaufort have insisted that the issues they have been shut down over are common practice in the sectior. This means that anyone with cash invested through a broker could find themselves in the exact same position as the victims of Beaufort and the FCA.
    • eskbanker
    • By eskbanker 16th May 18, 11:50 AM
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    eskbanker
    It is worth noting that Beaufort have insisted that the issues they have been shut down over are common practice in the sectior. This means that anyone with cash invested through a broker could find themselves in the exact same position as the victims of Beaufort and the FCA.
    Originally posted by Col Jessop
    It only means that if Beaufort's statement is true and accurate - personally I'd file it under "they would say that, wouldn't they?".
    • justme111
    • By justme111 16th May 18, 1:32 PM
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    justme111
    seeing how often it happens in healthcare or education I can readily believe them.
    • eskbanker
    • By eskbanker 16th May 18, 2:03 PM
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    eskbanker
    seeing how often it happens in healthcare or education I can readily believe them.
    Originally posted by justme111
    Not sure I'm following, what's the "it" that happens in healthcare and education that's relevant to Beaufort's reference to asset management practices within the financial services sector, or were you referring to something in another post?
    • justme111
    • By justme111 16th May 18, 11:06 PM
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    justme111
    " it " being either a systemic failure which is neither dealt with nor acknowledged or widespread practices which are officially disapproved off but turns blind eye to until due to some unlucky set of circumstances there happened to be someone on the front line who is publicly condemned serving role of a scapegoat
    • Col Jessop
    • By Col Jessop 17th May 18, 8:22 AM
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    Col Jessop
    Problem is that many of the issues being highlighted in the financial media in relation to Beaufort are indeed common practice.

    It looks like PWC are still refusing to provide victims of Beaufort and the FCA with their own financial information in terms of transactions. Where victims of Beaufort and the FCA suspect that cash and / or asets have been lost / stolen from their account they are being denied access to transactional information that would deliver the evidence to a crime being committed.

    This lack of transparency lends weight to the view of PWC, the FCA and FSCS colluded to maximise the losses for victims of Beaufort and the FCA and perhaps to cover up criminal activity by Beaufort and perhaps negligence on the part of the FCA,

    If there have been criminal charges brought in the USA against individuals in Beaufort, why is there no criminal investigation going on the UK? Are our citizens just expected to accept the losses so that the credibility of the finance sector and the FCA is protected.
    • Col Jessop
    • By Col Jessop 17th May 18, 8:35 AM
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    Col Jessop
    " it " being either a systemic failure which is neither dealt with nor acknowledged or widespread practices which are officially disapproved off but turns blind eye to until due to some unlucky set of circumstances there happened to be someone on the front line who is publicly condemned serving role of a scapegoat
    Originally posted by justme111
    There should be a UK-led criminal investigation into Beaufort. As you rightly point out the illegal practices aka blatant fraud at Beaufort is indeed par for this industry. We started with PWC claiming that there were £700m of sach and assets. This was quickly reduced to £500m. That is £200m of investors good faith being managed fraudulantly.

    Then there's the £100m out of the £500m that PWC is taking for delivering an insolency system designed to maximise their profits and maximise the losses for the victims.

    The initiator of the thread asked if Beaufort is different to any other investment platform. The reality is that it could very well be you next. As soon as I get my assets back they will be sold. The stockmarket is not safe for use.

    The FCA regulation has proven itself worthless in terms of offering trust in brokers that are ratified by them. They have demonstrated utter contempt for investors. They new about criminal activity at Beaufort from the US Goivernment and fialed in their duty to inform UK citizens that they were at risk.

    The FCA have a proces designed to maximise losses for the victims and have rubber stamped PWC to take £100m out of a £500m kitty. The FSCS are meeting with Beaufort, PWC and the FCA with no involvement from the victims of Beaufort and the FCA.

    The members of the Treasury Select Committee have been deafening with their silence on this scandal. Why is there not questions being asked by members of the Treasury Select Committee in relation to the losses incurred by UK citizens and the lack of a criminal investigation in the UK, whilst the USA acts on behalf of its citizens?
    • Glen Clark
    • By Glen Clark 17th May 18, 9:34 AM
    • 4,138 Posts
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    Glen Clark
    There should be a UK-led criminal investigation into Beaufort. As you rightly point out the illegal practices aka blatant fraud at Beaufort is indeed par for this industry. We started with PWC claiming that there were £700m of sach and assets. This was quickly reduced to £500m. That is £200m of investors good faith being managed fraudulantly.
    ..........
    Originally posted by Col Jessop
    Its obviously complex and £700m sounds like an initial estimate.
    Bit strong to call it fraud and go off on one.
    But I do sympathise and your anger is understandable.
    Just don't throw it around like a loose cannon.
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
    • Col Jessop
    • By Col Jessop 17th May 18, 12:35 PM
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    • 7 Thanks
    Col Jessop
    ShareSoc now has hundreds of victims of Beaufort and the FCA joining their campaign. The victims of Beaufort and the FCA are not completing the claims form as it is not fit for purpose as the first step in the process demands that you accept the statement regarding the cash and assets in your account. It looks like there is cash and assets missing from accounts based on victims of Beaufort and the FCA refusing to follow an unfair and unjust process.

    The victims need full disclosure on the transactions made on their accounts. We need to see all of the information for ourselves rather than trust parties with vested interests in maximising our losses investigate on our behalf. We should be given view only access to our accounts immediately. There is no fair and just reason why information relating to our own accounts should be withheld from us.

    A £700M pot has been reduced to £400M and not so much as an explanation provided by PWC or the FCA.
    • Malthusian
    • By Malthusian 17th May 18, 12:52 PM
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    Malthusian
    As I understand it the explanation of £700m being reduced to £400m is pretty simple. £300m was toxic unregulated junk held by Beaufort clients, which was previously being valued at book cost or otherwise fictitiously valued, and is now being correctly valued at nil.

    Clients have lost nothing as a result of this £300m write-down, because there was never any £300m, the money was already gone.

    However I do understand that plenty of Beaufort clients were not invested in toxic unregulated junk, and are nonetheless faced with an ongoing lack of clarity as to how much is in their accounts.
    • Linton
    • By Linton 17th May 18, 12:52 PM
    • 9,386 Posts
    • 9,519 Thanks
    Linton
    There should be a UK-led criminal investigation into Beaufort. As you rightly point out the illegal practices aka blatant fraud at Beaufort is indeed par for this industry. We started with PWC claiming that there were £700m of sach and assets. This was quickly reduced to £500m. That is £200m of investors good faith being managed fraudulantly.

    Then there's the £100m out of the £500m that PWC is taking for delivering an insolency system designed to maximise their profits and maximise the losses for the victims.

    The initiator of the thread asked if Beaufort is different to any other investment platform. The reality is that it could very well be you next. As soon as I get my assets back they will be sold. The stockmarket is not safe for use......
    Originally posted by Col Jessop

    Perhaps it may be useful if you give us some idea of what your assets were. If they were simply shares that could be sold on the stockmarket as you imply then there should be no issue and your comments may well be justified. On the other hand if they included the equivalent of storage pods, airport parking spaces, hotels in Cape Verde, and high risk loans to dodgy companies the "missing" £200M would simply be the result of a more realistic valuation - as said here. And in this case the costs for PWC could include substantial legal fees recovering the money.
    • eskbanker
    • By eskbanker 17th May 18, 1:04 PM
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    eskbanker
    A £700M pot has been reduced to £400M and not so much as an explanation provided by PWC or the FCA.
    Originally posted by Col Jessop
    Further to the above explanations of how the pot was reduced to £500m following the independent asset (re)valuation, PWC have also gone into more detail about the much-quoted £100m cost figure, at https://www.pwc.co.uk/services/business-recovery/administrations/beaufort/latest-news-and-update.html
    A meeting of creditors and Clients was held on 10 May 2018 for the purposes of voting on our proposals and electing a creditors’ committee, as well as providing the opportunity to interact in an open forum with the administrators. The proposals were duly approved and a committee appointed.

    There were several questions on costs and also cost allocation. It was explained that the initial £100m reserve estimate was the highest forecast scenario assuming a four-year process and it was expected that eventually costs would be significantly lower.

    The reserve includes the costs of maintaining ongoing operations including 35 retained Beaufort staff, office space and related expenditure, alongside the IT infrastructure which is critical to support the client records. Additionally there will be the costs of the administrators and legal advisers. Finally we have included a general contingency and VAT.

    Both the level of reserve and its allocation will be determined in conjunction with the committee. Overall costs to date are in the order of £6m.

    The administrators also confirmed that they had drawn no fees to date and that their fees would be approved by the committee (or failing that, the Court).
    Edit: for anyone interested in ShareSoc's activities on this, they published a piece ahead of that meeting (https://www.sharesoc.org/sharesoc-news/beaufort-client-campaign-update-1/) and it would appear that they succeeded in getting their preferred highly-qualified representatives onto the creditor committee, each with plenty of skin in the game through substantial Beaufort-managed holdings, so this should be a basis for client voices to be heard....
    Last edited by eskbanker; 17-05-2018 at 1:24 PM. Reason: Added ShareSoc campaign link
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