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UK brokerage charged with stock manipulation after FBI sting
Beaufort is charged with orchestrating securities fraud and money laundering schemes
March 2, 2018
The US Department of Justice building in Washington DC © AFP
The US Department of Justice has charged UK broker Beaufort Securities and several of its staff with orchestrating securities fraud and money laundering schemes totalling $50m, following a sting led by an undercover FBI agent.
The DoJ has charged the broker and one of its investment managers, Peter Kyriacou, with manipulating trading in small-cap US stocks using so-called “pump-and-dump schemes”, which brought in more than $50m for clients.
Beaufort facilitated 10 such schemes between 2014 and 2018, the DoJ said. Mr Kyriacou and several others also offered to launder £6.7m which they believed to be the proceeds of securities fraud for the undercover agent, using the purchase and sale of art — including a Pablo Picasso painting.
In total, the DoJ indicted six people and four corporate defendants in a scheme that involved a network of brokers spanning the Caribbean, Mauritius, London and Budapest.
“The defendants engaged in an elaborate multiyear scheme to defraud the investing public of millions of dollars through deceit and manipulative stock trading, and then worked to launder the fraudulent proceeds through offshore bank accounts and the art world,” said US attorney Richard Donoghue.
A manager at Beaufort, Arvinsingh Canaye, was arrested in New York on Thursday, the DoJ said.
During an undercover operation, Mr Kyriacou is alleged to have unwittingly discussed with an FBI agent the manipulation of shares in HD View 360, a provider of security surveillance products, through false promotions and matched trades. He also opened accounts for the agent in the names of offshore companies with nominee shareholders in order to help hide the agent’s identity.
A web of other companies who helped facilitate the fraud and money laundering were named on the indictment as Loyal Bank, an offshore bank with offices in Budapest, Saint Vincent, and Loyal Agency and Trust Corp, an offshore management group located in Saint Vincent.
Separately, the US Securities and Exchange Commission charged Beaufort and Mr Kyriacou with manipulating trading in HD View 360. The SEC alleged that HD View 360’s chief executive Dennis Mancino and other executives took part in the scheme in exchange for a kickback from the trading proceeds.
The UK’s Financial Conduct Authority, which early on Friday declared Beaufort insolvent, said it is helping the DoJ with its investigation and has launched its own probe.
The insolvency left a number of UK small-cap companies without a broker, with several making announcements seeking an immediate replacement.
Following an urgent application from the FCA, the UK’s High Court has appointed three consultants with PwC as joint administrators for the broker, which had more than 100 staff. According to the administrators, the company had about 14,000 clients, with £37m in client money and £664m in client assets.
Nigel Rackham, joint administrator and PwC director, said that his priority was “to safeguard the firms’ custody and client money holdings held for their clients”.
He added: “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.”
Beaufort could not be contacted for comment, but the broker posted on Twitter confirming it had entered insolvency and ceased trading.
UK brokerage charged with stock manipulation after FBI sting
Beaufort is charged with orchestrating securities fraud and money laundering schemes
March 2, 2018
The US Department of Justice building in Washington DC © AFP
The US Department of Justice has charged UK broker Beaufort Securities and several of its staff with orchestrating securities fraud and money laundering schemes totalling $50m, following a sting led by an undercover FBI agent.
The DoJ has charged the broker and one of its investment managers, Peter Kyriacou, with manipulating trading in small-cap US stocks using so-called “pump-and-dump schemes”, which brought in more than $50m for clients.
Beaufort facilitated 10 such schemes between 2014 and 2018, the DoJ said. Mr Kyriacou and several others also offered to launder £6.7m which they believed to be the proceeds of securities fraud for the undercover agent, using the purchase and sale of art — including a Pablo Picasso painting.
In total, the DoJ indicted six people and four corporate defendants in a scheme that involved a network of brokers spanning the Caribbean, Mauritius, London and Budapest.
“The defendants engaged in an elaborate multiyear scheme to defraud the investing public of millions of dollars through deceit and manipulative stock trading, and then worked to launder the fraudulent proceeds through offshore bank accounts and the art world,” said US attorney Richard Donoghue.
A manager at Beaufort, Arvinsingh Canaye, was arrested in New York on Thursday, the DoJ said.
During an undercover operation, Mr Kyriacou is alleged to have unwittingly discussed with an FBI agent the manipulation of shares in HD View 360, a provider of security surveillance products, through false promotions and matched trades. He also opened accounts for the agent in the names of offshore companies with nominee shareholders in order to help hide the agent’s identity.
A web of other companies who helped facilitate the fraud and money laundering were named on the indictment as Loyal Bank, an offshore bank with offices in Budapest, Saint Vincent, and Loyal Agency and Trust Corp, an offshore management group located in Saint Vincent.
Separately, the US Securities and Exchange Commission charged Beaufort and Mr Kyriacou with manipulating trading in HD View 360. The SEC alleged that HD View 360’s chief executive Dennis Mancino and other executives took part in the scheme in exchange for a kickback from the trading proceeds.
The UK’s Financial Conduct Authority, which early on Friday declared Beaufort insolvent, said it is helping the DoJ with its investigation and has launched its own probe.
The insolvency left a number of UK small-cap companies without a broker, with several making announcements seeking an immediate replacement.
Following an urgent application from the FCA, the UK’s High Court has appointed three consultants with PwC as joint administrators for the broker, which had more than 100 staff. According to the administrators, the company had about 14,000 clients, with £37m in client money and £664m in client assets.
Nigel Rackham, joint administrator and PwC director, said that his priority was “to safeguard the firms’ custody and client money holdings held for their clients”.
He added: “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.”
Beaufort could not be contacted for comment, but the broker posted on Twitter confirming it had entered insolvency and ceased trading.
