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UK broker Beaufort placed into insolvency, faces US charges

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UK broker Beaufort placed into insolvency, faces US charges

The U.K. Financial Conduct Authority placed Beaufort Securities Ltd. and Beaufort Asset Clearing Services Ltd. into insolvency following a review of their financial positions.

The U.K. High Court appointed Russell Downs, Douglas Rackham and Dan Schwarzmann of PricewaterhouseCoopers as joint administrators for Beaufort Securities and as joint special administrators for the asset clearing unit. Effective immediately, both companies will also be required to stop all regulatory activities and barred from disposing any firm or client assets without the FCA's permission.

The administrators will contact all affected clients in due course, the FCA added.

The FCA also said it was cooperating with the U.S. Department of Justice in a probe of Beaufort. The DOJ said March 2 that it charged the company, three other firms and six individuals — Panayiotis Kyriacou, Arvinsingh Canaye, Adrian Baron, Linda Bullock, Matthew Green and Aristos Aristodemou — with conspiracy to commit securities fraud and money laundering conspiracy, among other things.

The DOJ accused London-based brokerage firm Beaufort Securities; Mauritius-based off-shore management company Beaufort Management Services Ltd.; Loyal Bank Ltd., an offshore lender with offices in Budapest and in Saint Vincent and the Grenadines; and offshore management company Loyal Agency and Trust Corp., along with the six individuals, of participating in a multiyear scheme to defraud investors and potential investors in various U.S. publicly traded companies by concealing the true ownership of various companies and manipulating the price and trading volume of those companies.

Beaufort Securities allegedly facilitated at least 10 "pump and dump" schemes, generating over $50 million in proceeds for its clients.

These individuals and companies are also accused of devising and engaging in a scheme to launder the proceeds of securities fraud for their clients, by transferring funds to Loyal Bank accounts in the name of offshore shell companies controlled by the clients. Loyal Bank then provided debit cards so that clients could withdraw the funds in an untraceable manner.

Separately, Kyriacou, Aristodemou and Green, who owned an art gallery in London, and their co-conspirators are accused of agreeing to launder £6.7 million, or more than $9 million, for an undercover agent, who said the funds were the proceeds of securities fraud. After initially proposing to launder the money through real estate investments, the accused co-conspirators decided instead to do so through the purchase and sale of a Pablo Picasso painting, with Aristodemou describing the art market as "the only market that is unregulated," according to the DOJ.

The DOJ identified Baron as chief business officer of Loyal Bank and a director of Loyal Agency, and Bullock as CEO of the bank and a director of the agency. Canaye, general manager of Beaufort Management Services, was arrested March 1 and was scheduled to be arraigned March 2 in federal court in Brooklyn, N.Y.

Additionally, the U.S. Securities and Exchange Commission filed a civil complaint March 2 against Beaufort Securities and Kyriacou.