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Beaufort Securities - alarming email? Panic not....the FCA is not shutting it down

By Tom Winnifrith | Saturday 9 September 2017


Regular readers will know that I am not the greatest unadulterated fan of Beaufort Securities. And thus when I saw an email it sent out on Friday to clients, for a moment I read the worst for it. Au contraire.

The email reads:

We are implementing changes to our client money and client asset safeguarding arrangements in order to ensure Beaufort Asset Clearing Services Limited adheres to regulatory protocol and best market practice. We are currently working with the FCA and will ensure that all necessary changes are addressed as a matter of priority. These changes are in addition to the significant investment we have already made to replace our existing system infrastructure with a fully integrated system and operating platform.

What we cannot do

Whilst we resolve these issues, effective as of 8th September 2017:
Beaufort Asset Clearing Services Limited has agreed not to: (i) accept any new money or assets from new or existing clients and (ii) extend existing or provide new credit lines to clients. Beaufort Securities Limited has confirmed that it will not utilise its permission to safeguard and administer assets or receive or hold client money.

What we can do

Beaufort Securities Limited and Beaufort Asset Clearing Services Limited can continue its existing client relationship to the extent that we can continue to:
trade your existing monies and assets held by us; close out derivative trades; receive sales proceeds from the sale of client safe custody assets where we were the custodian;receive dividends or coupons by virtue of us acting as custodian for your safe custody assets; receive redemption proceeds; and proceeds from rights issues.

As indicated above, this is a temporary measure which is in place whilst Beaufort Asset Clearing Services Limited implements changes to its client money and client asset safeguarding arrangements including the successful implementation of its new fully integrated system and operating platform.

Okay so what is this about?

Last October there was a rogue trader at Beaufort. We knew that already. The FCA said that Beaufort's systems and controls should have spotted this and put a stop to it and demanded change.

Beaufort has responded by introducing a new platform, one already used by firms such as Brewin Dolphin, to address all the compliance and other issues raised by the chocolate teapots at the FCA. That platform is not ready to go live until mid October and thus until then cannot open a new account with Beaufort or if you are a client add funds to your account. You can, however, sell shares on your account and use cash already on the account to buy other shares or you can get your ash back.

If this was truly serious Beaufort would be stopped from doing any business. It is not so the broker carries on trading. For once I actually have some sympathies with this broker. If a trader is determined to go rogue then whatever controls and systems a form has in place will not stop him ( or her) from breaking the rules. It is not as if Beaufort is the only broker facing such as problem and it has responded the right way.

For clients it really is, more or less, business as normal.

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