Following a heated meeting with furious clients of collapsed stockbroker Beaufort Securities, liquidator PwC announced yesterday that it has nearly halved its forecast for the cost of returning funds from £100m to £55m. We spoke to Mark Bentley, director of ShareSoc’s campaign against the unjust treatment of Beaufort’s clients, to see how investors are responding to his claims the auditor is making ‘a mockery of regulatory protections in the UK’.
Earlier this month, hundreds of people met in London to vote on PwC’s proposals to use up to £100m of client funds to wind down Beaufort, which was shut by the FCA in March following a US sting operation. PwC has said that discrepancies in Beaufort’s accounts and the illiquid nature of many investments have made the insolvency process highly complex and, in turn, costly. But many clients have said the fees are exorbitant, arguing that they should not be recovered from client assets while raising concerns that additional losses could occur if PwC sells illiquid client assets ham-fistedly.
These concerns ultimately led ShareSoc to launch a campaign to raise a ‘fighting fund’ comprised of donations from supporters. This money will be used primarily to take legal advice on how to challenge the administration and, if needed, will be put towards initiating litigation to make an effective challenge. ShareSoc argues that PwC’s proposals breach the safety of ring-fenced assets and bring into question the whole system of regulatory and legal investor protection.
Following heavy criticism over its fees at this month’s meeting, PwC said yesterday that costs are now forecast to hit £55m, reflecting a plan to distribute assets within two years, instead of four years. Regardless, ShareSoc’s campaign continues, with Bentley telling us that legal representation is vital for clients going forward:
‘We are firm in our view that the committee needs to seek professional advice, as PWC will have Linklaters in their corner. Considering there are large amounts of money at stake, it is crucial that clients get representation.’
He said he has been humbled by the strong response to the campaign so far: ‘We have collected around £7,000, which will potentially rise to £12,000 with commitments that have been made by other parties. That’s enough to buy some serious legal time.’
He added that ShareSoc has been informally advised that such essential advice, to drive costs down, could be paid out of the administration costs. If this happens, and the funds raised do not end up paying for legal representation, then Bentley said the money could fund general ShareSoc purposes. With the group broadly aiming to make private investors better informed to improve their investment skills and protect the value of their investments, we believe this remains a great cause to back.
Alongside ShareSoc, ValueTheMarkets has also campaigned to secure full representation for Beaufort’s retail clients who voiced legitimate concerns about the process. Following our calls, well-known retail investor activist David Kipling elected as a co-opted observer on the Beaufort Securities creditors’ committee, on behalf of small clients, at this month’s meeting. Kipling has said he is willing to receive questions from clients collated by our readers.