12-05-2018, 04:55 PM
Some of the figures of the Beaufort Securities debacle could perhaps be scaled to estimate the costs of COL: This article from the FT recently.
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Customers of collapsed UK brokerage Beaufort Securities have voted in favour of retaining PwC as administrator and accepted its proposals to use up to £100m of private investors? funds to pay insolvency fees, following a fiery creditors? meeting on Thursday.
PwC confirmed on Friday that clients of the broker, which was shut down by the UK regulator in March, had voted in favour of its proposals, which include a worst-case scenario of spending £100m to return cash and assets valued at £550m to customers.
PwC also confirmed a creditors? committee had been appointed to oversee the insolvency process. PwC said the committee represented ?the spectrum of client interests?.
Mark Bentley, director of consumer action group ShareSoc, said: ?This is a grudging acceptance, rather than something we really want. PwC?s initial proposals looked unacceptable but we understand that the actual fees and deductions from clients portfolios are likely to be lower than was originally suggested.
?On that basis we have agreed but the creditors? committee will be critical for holding PwC?s feet to the fire.?
PwC told clients on Thursday it had so far spent £6m on the administration and expected to spend about £20m by the end of September.
But customers remain angry about the potential cost of the insolvency, which will be taken from their accounts.
PwC has argued that major discrepancies in Beaufort?s accounts and the ?exotic? and illiquid nature of many customer investments make the process more costly and complex.
In proposals presented to clients before the Thursday meeting, the administrator told customers that of the 4,000 lines of stock owned by Beaufort customers, there were errors and problems with 150 of them, including unfinished trades, outstanding corporate actions and issues relating to a technology upgrade.
PwC has written down the value of client assets from £800m to £500m after discovering a number of ?illiquid positions? which PwC believed had been incorrectly valued. Some 700 clients with larger portfolios of more than £150,000 in cash and assets could lose up to 40 per cent of their ringfenced assets.
Hours after Beaufort was put into insolvency in the UK, the US Department of Justice brought criminal charges against the company and several employees for allegedly manipulating US penny stocks via so-called ?pump-and-dump? schemes and orchestrating money laundering.
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I believe PWC were appointed on 1 March 2018 - so they have spent £6 million in 10 weeks or £600,000 per week. The September estimate works out at £20M over 7 months or about £3million per month, again around £600,000 to £700,000 per week. If the spend rate (gravy train) is maintained on track then it may take 35 months or around 3 years to spend 'up to' £100 million.
The value of all COL assets/loans was around £17 million (?)and the number of loans maybe 50?? It is to be hoped the process proves to be much more straightforward than Beaufort - if indeed the COL website and records are in decent order and the COL directors are co-operating. Borrowers may be queuing up to redeem or refinance - we have not been told.
I'm going to suggest that the COL admin should cost no more than £20,000 to £30,000 per week and not last longer than 3 months. Given access to all the databases etc I reckon I and a few fellow investors could do much of it ourselves!! I know this would be against all manner of rules, but most parts of the job are not actually difficult now are they?
The legal complexities of arguments between FCA and COL directors (and which may play out over years) should surely not be funded from investor monies. There may need to be a court case to have all the loans 'regularised' - investors were misled into thinking COL was 'authorised and regulated by the FCA' and neither borrowers nor investors should suffer unduly because the fine print of contracts or 'permissions' were inadequate. This is surely a matter the High Court could help to put right, if only by ordering that all COL director assets be liquidated and utilised? The validity of all loans and the rank order of tranches within some of the larger loans might also need to be confirmed by the High Court.
I'll await the howls of protest and sniping from the sidelines.
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Customers of collapsed UK brokerage Beaufort Securities have voted in favour of retaining PwC as administrator and accepted its proposals to use up to £100m of private investors? funds to pay insolvency fees, following a fiery creditors? meeting on Thursday.
PwC confirmed on Friday that clients of the broker, which was shut down by the UK regulator in March, had voted in favour of its proposals, which include a worst-case scenario of spending £100m to return cash and assets valued at £550m to customers.
PwC also confirmed a creditors? committee had been appointed to oversee the insolvency process. PwC said the committee represented ?the spectrum of client interests?.
Mark Bentley, director of consumer action group ShareSoc, said: ?This is a grudging acceptance, rather than something we really want. PwC?s initial proposals looked unacceptable but we understand that the actual fees and deductions from clients portfolios are likely to be lower than was originally suggested.
?On that basis we have agreed but the creditors? committee will be critical for holding PwC?s feet to the fire.?
PwC told clients on Thursday it had so far spent £6m on the administration and expected to spend about £20m by the end of September.
But customers remain angry about the potential cost of the insolvency, which will be taken from their accounts.
PwC has argued that major discrepancies in Beaufort?s accounts and the ?exotic? and illiquid nature of many customer investments make the process more costly and complex.
In proposals presented to clients before the Thursday meeting, the administrator told customers that of the 4,000 lines of stock owned by Beaufort customers, there were errors and problems with 150 of them, including unfinished trades, outstanding corporate actions and issues relating to a technology upgrade.
PwC has written down the value of client assets from £800m to £500m after discovering a number of ?illiquid positions? which PwC believed had been incorrectly valued. Some 700 clients with larger portfolios of more than £150,000 in cash and assets could lose up to 40 per cent of their ringfenced assets.
Hours after Beaufort was put into insolvency in the UK, the US Department of Justice brought criminal charges against the company and several employees for allegedly manipulating US penny stocks via so-called ?pump-and-dump? schemes and orchestrating money laundering.
**************************************************************************************************************
I believe PWC were appointed on 1 March 2018 - so they have spent £6 million in 10 weeks or £600,000 per week. The September estimate works out at £20M over 7 months or about £3million per month, again around £600,000 to £700,000 per week. If the spend rate (gravy train) is maintained on track then it may take 35 months or around 3 years to spend 'up to' £100 million.
The value of all COL assets/loans was around £17 million (?)and the number of loans maybe 50?? It is to be hoped the process proves to be much more straightforward than Beaufort - if indeed the COL website and records are in decent order and the COL directors are co-operating. Borrowers may be queuing up to redeem or refinance - we have not been told.
I'm going to suggest that the COL admin should cost no more than £20,000 to £30,000 per week and not last longer than 3 months. Given access to all the databases etc I reckon I and a few fellow investors could do much of it ourselves!! I know this would be against all manner of rules, but most parts of the job are not actually difficult now are they?
The legal complexities of arguments between FCA and COL directors (and which may play out over years) should surely not be funded from investor monies. There may need to be a court case to have all the loans 'regularised' - investors were misled into thinking COL was 'authorised and regulated by the FCA' and neither borrowers nor investors should suffer unduly because the fine print of contracts or 'permissions' were inadequate. This is surely a matter the High Court could help to put right, if only by ordering that all COL director assets be liquidated and utilised? The validity of all loans and the rank order of tranches within some of the larger loans might also need to be confirmed by the High Court.
I'll await the howls of protest and sniping from the sidelines.
PLEASE NOTE : My opinions are of a personal nature. I am not a professional financial advisor. My observations and views should not be taken as advice. I accept no responsibility or liability for the accuracy or completeness of any of the information in my posts.