High Court backs SFA on liquidation of Branston

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THE HIGH COURT yesterday rejected an attempt by the management of Branston & Gothard, a private client stockbroker closed by regulators in April, to add their own representative to the team of liquidators winding up the broker.

This clears the way for the existing liquidators, PricewaterhouseCoopers, to continue tracking down assets owed to 14,500 investors. The liquidators, Steve Hill and Adrian Stanway, partners in PWC, have refused to comment on City rumours that investors may be hit by a shortfall of up to pounds 5m.

Branston & Gothard, founded in 1902, was closed this year by the Securities and Futures Authority (SFA) because of a "deficiency in financial resources". It employed 140 people, although most income came from "half-commission men" or self-employed brokers who shared their commission with the firm in return for leads, office space and similar benefits.

The High Court heard that the provisional liquidators have already returned pounds 27m to investors, and have not yet reached a definite view on any shortfall or surplus. Their representative told the court yesterday that there "is still much work to be done".

Barristers representing the liquidators and the SFA urged Mr Registrar Rawson to reject an application by Firstdale, a vehicle representing Branston & Gothard's management and majority shareholders, to introduce a new joint liquidator on behalf of the management.

Firstdale were proposing Deloitte & Touche as joint liquidators, and wanted to make the process a "voluntary" liquidation, where the existing company management controls the process.

The SFA and the provisional liquidators wanted to make it a "compulsory" liquidation, with PWC firmly in control. The barrister for PWC said they were supported by creditors owed a total of pounds 3.5m.

Mr Registrar Rawson found in favour of the SFA, and ordered that Branston & Gothard be compulsorily wound up. The Official Receiver, representing the Government, will discuss with Mr Stanway and Mr Hill how best to wind the business down, recover its assets and distribute them.

Branston & Gothard was a bastion of old City values, particularly in its relationship with half-commission men. It employed the City's oldest working stockbroker, 87-year-old Jimmy Herbert.

Mr Herbert heard about the closure in April while he was on holiday in Tenerife. He subsequently joined another broker, Hichens Harrison.