The UK’s audit watchdog is probing accountancy firms linked to Market Financial Solutions Ltd., the mortgage lender backed by multiple Wall Street banks that collapsed in February.
The Financial Reporting Council has opened investigations into Magus Chartered Accountants and two individual accountants in relation to their work on MFS and connected companies, according to a statement Thursday. The FRC is also probing Berkeley Finch, which audited MFS’ financial statements for the calendar year ending 2024, the watchdog said.
The FRC is also investigating Silver Levene UK, the auditor of an MFS-linked entity, Zircon Group Ltd. Another individual accountant faces a separate investigation for conduct in work carried out for MFS. The FRC didn’t name the individuals it’s investigating.
MFS was at the center of a sprawling group of companies that borrowed from backers including Barclays Plc, and Apollo Global Management Inc.’s Atlas SP Partners. The London-based firm was supposed to use the money to finance short-term real estate loans yet collapsed amid allegations of wrongdoing and fraud.
In March, the UK’s Financial Conduct Authority said it had began an investigation into MFS, marking the first publicly disclosed action by authorities into the mortgage lender.
A spokesperson for Silver Levene said the firm is aware of the investigation and will “cooperate fully.” “As the FRC has noted, the opening of an investigation does not indicate that any findings have been made,” the spokesperson said in an emailed statement.
Emails requesting comment from Magus and Berkeley Finch weren’t immediately returned. A spokesperson for MFS Chief Executive Officer Paresh Raja didn’t immediately respond to requests for comment.
MFS borrowed about £2.6 billion ($3.4 billion) from Wall Street banks and investment firms, also including Banco Santander SA and Wells Fargo & Co. They forced MFS into administration, a UK form of insolvency, in February.
Officials appointed to oversee MFS’ administration alleged in UK court that Raja used the firm’s borrowed funds to amass a personal property empire and a cash fortune of at least £408 million. They claimed “fraud on a vast scale, backed up by systematic dishonest reporting,” in court filings.
One of the key allegations made by creditors is that much of MFS’ lending didn’t go to genuine borrowers but to a group of “Raja-linked individuals” who were acting on his behalf, according to court filings. Some of those individuals have links to Magus.
Khemanand Hurhangee, a director at Magus Accounting Ltd., has amassed a property portfolio worth more than £200 million on paper, backed by scores of loans arranged by MFS, Bloomberg previously reported. Dipendra Amin, the majority shareholder, is also among MFS’ biggest borrowers on paper.
Photograph: The Market Financial Solutions’ offices in London; photo credit: Jose Sarmento Matos/Bloomberg
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