PwC is set to saddle ripped-off savers with up to £55m of legal fees
One of Britain’s biggest auditors is facing a fresh scandal for saddling innocent savers with up to £55million of fees.
Bean-counter PwC has warned clients of failed broker Beaufort Securities that bills related to its collapse will come out of their nest eggs.
It said recovering £550million of customers’ money will cost up to £55million in legal expenses and charges, and take two years.
Around 700 clients with more than £150,000 invested through Beaufort could lose as much as 40 per cent of their holdings.
PwC had predicted the bill would be even higher, at £100million.
The plan has sparked fury because the savers with money at risk have done nothing wrong, there are no claims that their money is missing and they never bought equity in Beaufort or lent it cash.
Instead, the funds were invested in businesses on the AIM stock market using Beaufort’s services.
Snared By The FBI
Beaufort Securities was wound down after staff were charged with orchestrating a money-laundering fraud worth around £40million.
A broker was charged with a so called ‘pump-and-dump’ scheme trading in smaller companies.
Staff were caught during an undercover operation, where they were alleged to have discussed, with an FBI agent, the manipulation of shares.
Money was also alleged to have been attempted to be laundered through a London art dealer in exchange for the sale of Picasso paintings.
It is feared UK rules which made the PwC charges possible could put millions of other people’s money at risk if other brokers fail.
Small shareholder group ShareSoc said: ‘The fact that PwC can dip into client assets and money means savings and investments are not as safe as the Financial Conduct Authority would have you think.
‘The liquidator’s proposals, which would breach the safety of ring-fenced assets, bring into question the whole system of regulatory and legal protection of investors. This has serious implications.’
Furious creditors called for PwC to cap its costs at £35million but it refused.
The £55million would be used to pay 35 staff kept on to shut down Beaufort and pay lawyers.
PwC said its fees will be a minority of the bill, saying: ‘Beaufort had minimal funds. In the absence of any other funds, the costs of administration have to come from somewhere, as hard as it is for clients to accept.’