It is not the first time rogue traders have brought down a large financial services institution, of course - remember Nick Leeson and Barings Bank, anyone? But it does underline how the world of high finance continues to have a murky underbelly that the so-called authorities seem powerless to rein in.
And in the meantime, we are all exposed to the fall out.
As the intermediaries who manage investments in the stock market, stockbrokers wield an enormous amount of financial clout. If you dabble in a few stocks and shares as a private investor, you should be very concerned about brokers acting in flagrantly irresponsible, immoral and illegal ways which jeopardise your investments.
But worse still, stockbrokers also manage the investment portfolios for hundreds of thousands of companies, who in turn employ millions of ordinary people. Amongst other things, anything untoward happening with corporate investment portfolios puts your pension at risk.
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The fall out from the Beaufort debacle will be considerable. Administrators at PwC have already written down the value of the company from £800m to £500m - wiping off a cool £300m from assets available for recovery to creditors.
That means the Financial Services Compensation Scheme (FSCS) is likely to have to step in. The FSCS protects investments in regulated schemes up to a value of £50,000, providing valuable insurance for small investors. It is paid for out of a levy from the financial services industry. The FSC has already raised its latest levy in anticipation of claims arising from the Beaufort Securities collapse, plus the scandal of botched pensions investment advice given to British Steel workers.
However, the £50,000 protection limit will not cover all losses arising from the Beauforts insolvency. Although PwC optimistically says it expects “the substantial majority” of clients to recover their portfolios in full - at a cost of £100m, we might add - it also concedes that around 700 investors with holdings in excess of £150,000 will probably lose more than the £50,000 FSCS compensation limit.
Let’s hope your pension scheme isn’t one of them.