The firms act as traditional stockbrokers servicing private investors, corporate clients and institutions and employ around 100 staff operating from a main office in the City of London and regional offices in Bristol and Colwyn Bay.

Approximately 14,000 clients have invested in products such as ISAs and pensions. Customer entitlements include £36.85m of client money and £664m in client assets. 

The FCA says it is necessary for insolvency practitioners to take over the running of the firms in order to protect assets from dissipation and protect customers. There are also concerns that the firms may be involved in financial crime.

The FCA is assisting the US Department of Justice (DoJ) with a separate investigation into BSL’s involvement in securities fraud related to stock of various US publicly-traded companies and international money laundering associated with that conduct. The DOJ unsealed an indictment in which BSL, in addition to other companies and individuals, has been charged with securities fraud and money laundering violations.

The FCA has also imposed requirements on the firms, with immediate effect, which mean they must cease all regulatory activity and not dispose of any firm or client assets without the FCA’s consent. The firms are subject to an assets requirement over all the client money and safe custody assets they hold for clients with no provision for anything other than to settle unclosed trades, and must also take appropriate steps to inform their clients they will no longer be able to conduct any regulated activities.

The FCA’s investigation is continuing.

In a statement, PwC said the priority for the administrators is to identify, protect and in due course return client money and assets to rightful clients to the fullest extent possible. This process is likely to be subject to an initial delay while the administrators carry out a number of critical tasks in order to be able to make a full assessment of the situation.

One of the first things the administrators will be undertaking is to determine the completeness of the segregated funds and assets compared to clients’ entitlements to form an early assessment of the indicative recovery available.

In the coming weeks the administrators will develop and publish a plan setting out how they will commence the return of client portfolios and holdings to new firms. They will also be taking steps to realise the firms’ own assets and assess their liabilities.

Nigel Rackham, joint administrator and PwC director, said: ‘The appointment of administrators has been rapid. Our key priority is to safeguard the firms’ custody and client money holdings held for their clients.

‘Once these positions are under our control and we have secured important trading and client data, we can start planning for the return to clients. However, this is likely to take some time.’

A helpline has been set up for clients: UK: 0800 063 9283 International: +44 (0)20 7293 0227

Report by Pat Sweet