Beaufort was regulated to provide financial advice, however in March 2018, they went into default at the Financial Conduct Authority (FCA) which means that claims can now be made against it up to £50,000.
Due to its previous unscrupulous business dealings Beaufort was fined by the FCA twice in less than three years, after its brokers were found to have used aggressive and pushy sales techniques. The FCA fined them £90,000 after uncovering many inappropriate sales practices which were below minimum acceptable standards.
The FCA said Beaufort’s employees sold poor quality stocks to clients who were pressurised into buying it, and even persuaded some clients to buy more. Brokers at Beaufort used high-handed selling practices and did not consider the interests of their customers. That penalty came less than three years after Beaufort was fined £150,000 for making a misleading statement to the market regarding a share placing by the media company PrimeEnt.
Beaufort’s chief executive at the time, Sean Blackwell, was refused FCA approval to become an investment manager. In addition the US Department of Justice brought criminal charges against Beaufort for its alleged involvement in securities fraud and money laundering. Beaufort was connected with the following appointed representatives and agents namely HB Axis Ltd and Sharecrazy.com Ltd
The mis-selling by Beaufort included but was not limited to:1.trading as principal but failing to disclose it, 2.Its stockbrokers/ financial advisors gave false or misleading information, 3. Risks were not adequately explained to customers, 4.The business failed to properly assess clients’ financial circumstances and 5.Shares purchased were wholly unsuitable for their clients’ portfolios and outside those clients’ normal risk levels.
So What Went Wrong?
The United States Department of Justice have charged BSL, Beaufort Management Services Ltd, Loyal Bank Ltd, and Loyal Agency and Trust Corp and six individuals with conspiracy to commit securities fraud and money laundering conspiracy.
Allegedly the four Corporate Defendants and six individuals “engaged in an elaborate multi-year scheme to defraud the investing public of millions of dollars through deceit and manipulative stock trading, and then worked to launder the fraudulent proceeds through off-shore bank accounts and the art world, including the proposed purchase of a Picasso painting.”
The FCA almost immediately imposed its own restrictions, requiring the firm to immediately cease all regulatory activity. All trades in process were stopped and client assets suspended. Clients were left powerless, without access to their investments for an unknown time.
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