UK watchdog says most clients will get all cash back from Beaufort

Many were impacted during the COVID crisis and tried to gain financial control even during the lack of job prospects and the risk of another lockdown. A low level of savings and erratic earnings causes low financial resilience. People can invest in innovative schemes to increase their earnings, but one should be cautious of such offers. 

Regulators found ten times the amount of misconduct reported during the global crisis compared to pre-pandemic times. Most people spent time at home searching for earning options, and over 75 per cent lost money in crypto assets. All new investors should look into the previous scams to understand how tricksters extract money from clients.

Such investment scams persuade buyers to spend money on unique assets and projects, and when they transfer funds, the fraudsters run off with the cash. The data by the FCA finds that crisis time has propelled the number of vulnerable adults and those with low financial resilience to grow in the year 2020.

Beaufort Fraud

In March 2018, Beaufort Securities' London-based brokerage firm was found guilty of securities fraud revealed through a sting operation. It resulted in the arrest of the investment manager at the brokerage and the verdict that the customers were likely to get all their money back. 

The FCA took action when the firm filed for insolvency, but it was bad news for all types of small retail investors associated with it as insolvency led to the loss of clients' / firm's assets. In addition, the firm advised its clients to ask for compensation claims from the financial advisors who had asked them to use the firm.

The firm specialised in helping small mining units, and it was declared insolvent after the $50m stock fraud and a money laundering case. Forty per cent of the frozen assets belonged to over 16K clients from the small mining firm and the retail investors.

The administrators confirmed over 90 per cent of the customers were eligible for the compensation scheme coverage as they were under the 50K pounds limit, and others were not eligible to claim all their cash back. In addition, some clients suffered for other reasons and were preparing to file a separate claim. 

However, the FCA said, "A four-year wait time to get the compensation can be difficult, and if the court approves the plan to disburse the funds, the disbursement will start in September 2018."

The FSCS has been posting about the failed schemes and claim assessments. The body had also informed that most claims would be completed by the end of August 2019, but there were difficulties in assessing some, and they took longer than expected. 

The firm consented to the court's jurisdiction, and they have been barred from offering penny stocks or indulging in brokerage, dealership or such businesses.

How to Identify Such Tricks to Deceive Customers?

• Most such firms effectively make unsolicited calls and send emails to encourage the buyers to invest money. If you get any such call, hang up and if someone emails, delete it and do not click on the links associated with the email as it can be fake.

• One should invest through familiar firms and check all the details before sending money to the other party.

• One should always seek advice from professional institutions before seeking options in stocks.