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Beaufort Securities administrators write down £300 million

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Beaufort Securities administrators write down £300 million

Administrators have marked down the value of Beaufort Securities' assets by £300 million after discovering a number of 'highly illiquid' positions. 

In an update to investors last week, PwC joint partner and administrator Russell Downs said the value of the failed broker's assets had been revised down from £800 million to £500 million following an independent valuation.  

'This [the valuation] has highlighted a number of important issues, including as noted above the fact that a number of highly illiquid and potentially nil value positions are held,' Downs said. 

'The carrying value used previously was based on a historic price which we do not believe appropriately reflects a more cautiously assessed valuation. The more conservative value for this assessment is in the region of £500 million.'  

PwC estimates that around 700 clients with assets valued over £150,000 may experience a loss in excess of the Financial Services Compensation Scheme limit of £50,000. However, it believes the 'substantial majority of clients will recover their portfolios in full in due course'. 

The administrators also warned that it could cost around £100 million to recover Beaufort's assets and return them to investors. 

The Financial Conduct Authority declared Beaufort Securities and its sister company Beaufort Asset Clearing Services Limited insolvent on the morning of 2 March. 

In the afternoon of that day, the firm was charged with fraud by US prosecutors in relation to stock trading and international money laundering, which was also linked to the purchase of a Picasso painting.

In his only interview following the collapse, Beaufort boss Tanvier Malik said staff were 'shocked' by the FCA's handling of the case. He claimed he and other company directors had injected a 'decent amount' of cash into the firm, just two days before it was declared bust by the UK watchdog. 

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