The tale of two wealth firms that both fell into administration, Arjent and Beaufort Securities, has left clients in a state of limbo as they wait to find out what will happen to their accounts.
Arjent, a boutique wealth firm which fell into administration in March 2016, had sold its client book, which at one point had around £100 million, to Beaufort Securities in September of that year.
Following the sale, which was for £50,000, it emerged that the Financial Conduct Authority (FCA) rejected an application by custodian Pershing Securities to conduct a bulk transfer of client accounts to Beaufort.
The regulator’s rejection came after the restriction of Beaufort’s discretionary permissions in December 2016.
Being Arjent’s client then was unlucky enough, but to actually be sold to Beaufort Securities, which went into administration this March after it was revealed that it is being charged by the US Department of Justice with securities fraud – well, the clients must really be feeling the pain.
The liquidators of Arjent, David Birne and Brian Johnson of HW Fisher, in their latest update to 17 April, stated that they passed on the details of the clients to Beaufort’s administrators, PwC.
They said: ‘Due to the restrictions placed upon Beaufort by the FCA, a large tranche of client assets remained, which have yet to transfer to Beaufort under the sale agreement. I have provided the joint administrators with details of the clients and the assets held on the Pershing and Lek platforms. As Beaufort acquired these clients under the sale, these assets will need to be dealt within the administration of Beaufort.’
Both firms have been declared in default by the Financial Services Compensation Scheme, meaning clients can seek compensation.
Elsewhere in the update, seen by Wealth Manager, under the agreement between the two firms, Beaufort had also said that it would reimburse Arjent in respect of all costs, claims and losses incurred in relation to its platform contracts, totalling £62,000.
When Beaufort failed to make its monthly payments on November and December 2017, Arjent issued a statutory demand. The total amount being sought was £50,500. Arjent’s solicitors ended up issuing a winding up petition against Beaufort, with the hearing date set for 25 April.
Before the hearing could take place however, Beaufort was placed in administration. While solicitors are continuing to work on recovering the costs of the petition, the liquidators have said they are liaising with PwC on how remaining clients will be dealt with.