The chief executive of collapsed Beaufort Securities has said staff at the wealth firm are ‘shocked’ by the Financial Conduct Authority’s (FCA) handling of the case.
In his first interview since the firm's collapse, Tanvier Malik told the Sunday Times there was no sign the City watchdog had serious concerns about the financial health of Beaufort.
To support this claim, Malik said he and other directors of the company injected ‘a decent amount’ of cash into Beaufort just two days before the FCA declared the company bust.
Malik told the Sunday Times: ‘We are all in shock. We still can’t get our heads around it. Not at one time have they said to me as CEO in the past three months “we have concerns with your balance sheet — you need to strengthen your balance sheet”. There’s no shortage of cash. There’s over £2 million there.’
The FCA declared Beaufort insolvent on the morning on 2 March. That afternoon the US Department of Justice charged Beaufort with fraud in relation to trading in the stock of a number of US companies and international money laundering.
Reports at the end of last week claimed the FCA had delayed shutting down Beaufort to allow US authorities to complete their probe into the firm. This raised concern the regulator was not acting in the best interest of clients by allowing the firm to keep operating when it knew it was effectively bust.
Earlier this year Wealth Manager revealed the Financial Ombudsman Service (FOS) had upheld a claim against Beaufort on the back of a stream of cases against the company.
A spokesperson said at the time: ‘We have been receiving a steady stream of cases over the last 10 months or so that we are in the process of looking into.’ They did not indicate how many cases there exactly were.
According to Beaufort's administrators, PricewaterhouseCoopers (PwC), the wealth firm had 14,000 pensions and ISA clients who had invested £664 million of client assets and £37 million of client money.
However, clients could face a long wait to learn whether they will get their money back.
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.’
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.