Beaufort Securities boss Tanvier Malik revealed staff at the broker were ‘shocked’ at the Financial Conduct Authority (FCA) handling of the case, in an interview for the Sunday Times.
Last week, the city stockbrokers was declared insolvent after the FCA suspended all regulated activities, amid its indictment in a $50m fraud and money laundering case brought forward by the US Department of Justice (DoJ).
However, reports also emerged last week that the FCA had delayed closing Beaufort Securities in light of the impending investigation by the DoJ.
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.’
Last week PwC, who have been appointed administrators, revealed they had frozen £800 million in client assets in light of ongoing legal action in the U.S, alongside facing insolvency as a result of the FCA.
The broker, which specialised primarily in oil and gas companies, has become shrouded in controversy after it was alleged that the company had intended to use client funds to purchase a Picasso painting “Personnages” valued at £6.7 million.
Nevertheless, prior to the scheduled purchase of the world famous art, the FBI arrested Vinesh Canaye, a Beaufort Securities investment manager involved in the deal, in a move that shocked the London art world.
It is thought that as many as 14,000 investors could stand to recover up 85 to 90 per cent of their funds. Nevertheless, the recovery process may take several months.
Alongside its London offices, the company also has staff in Bristol and Colwyn Bay in Wales, calling the future of 100 employees into question.
Nigel Rackham, a joint administrator from PwC, said: “We do forecast a substantial return to clients after costs, although this may take some time to implement and we do not see any returns commencing before mid-April as there are a number of challenges to overcome.
“In respect of the client assets there are a number of open positions and transactions which need to be resolved and concluded. This may impact the total once a final reconciliation takes place.”