George Popescu, the director of Boston Prime Ltd, a prime brokerage firm approved by the Financial Conduct Authority (FCA), has been disqualified for 12 years after owing over £8m to creditors
Boston Prime Ltd went into special administration in February 2015. At that point, the company disclosed assets estimated to realise £770,820, and liabilities to creditors of £8,185,981.
Following an investigation by the Insolvency Service, a disqualification order was made in the High Court in August 2017.
The court found Popescu had breached his fiduciary duties to act in the best interest of Boston Prime and failed to ensure that both the firm, and himself individually, as the approved person, complied with the FCA’s rules and guidance, following a proposed conditional sale of the company to a multinational group of companies in July 2014, which subsequently did not complete.
The Insolvency Service’s investigators discovered that Popescu relinquished control of Boston Prime’s affairs, including control of its bank accounts and books and records, to the purchaser following the proposed sale, without informing the FCA of the sale or change in control and that after he relinquished control.
The investigation also found he caused or allowed adjustments to be made of over $3m (£2.2m) to client’s trading accounts which were subsequently disputed by clients; caused or allowed the transfer of $3m from a trading account of Boston Prime to that of connected company and caused or allowed payments totalling $6.2m (£4.7m) to be made to two connected companies.
When asked to explain these transactions by the Insolvency Service’s investigators, Popescu was unable to provide the precise details or their legitimacy.
Robert Clarke, investigations group leader at the Insolvency Service, said: ‘Directors have a duty to ensure that they exercise sufficient control over company operations to ensure that the company complies with relevant regulations and that its transactions can be accounted for.’
HMRC background note:
Most businesses pay their taxes, but when a business goes under, the public purse may be left with large irrecoverable tax debts. HMRC, like any other creditor, has a duty to work with insolvency practitioners to work out whether the directors acted correctly at all times.
From 6 April 2012, HMRC can require employers to pay a security where there is serious risk, based on past behaviour that they will not pay their PAYE or Class 1 NICs.
Report by Pat Sweet
