The Beaufort Securities unit specializes in helping tiny companies sell shares to the public through the AIM market, a lightly-regulated junior bourse run by London Stock Exchange Group Plc. The firm arranged 65 deals in 2017, more than twice as many as any other, and raised about 43 million pounds ($59 million) for clients; most of the companies were minnows involved in exploring for oil, gas and minerals.

Undercover Agent

An undercover FBI agent posed as a prospective client in October 2016 and met with Beaufort employees in London, the U.S. said. The agent said he was interested in opening accounts to engage in multimillion-dollar trades that would manipulate the price and volume of stock.

The Beaufort employees created accounts for the agent even though they told him the firm couldn’t accept U.S. citizens as clients. But there were “ways around it,” they told him, according to the U.S.

During a subsequent meeting, the agent asked the Beaufort employees to help him launder money he claimed to have made in an earlier scam. The employees introduced the agent to the owner of Mayfair Fine Art Ltd. in London, with one of the employees suggesting they could purchase art and “clean the money.”

The Picasso

Later they proposed buying “Personnage, 1965” -- a Picasso -- for $6.7 million pounds ($9.2 million). Matthew Green, the owner of Mayfair, agreed to arrange the resale of the painting, according to the U.S. The money-laundering scam was stopped before the sale was completed, prosecutors said.

Contact information for Green, or Mayfair, couldn’t be immediately found. Green was charged in the case. Mayfair wasn’t.

The collapse of the Beaufort companies left dozens of clients scrambling to find a replacement broker. Under U.K. rules, firms that only had one broker or adviser will need to appoint a new one or face suspension in the trading of their shares.

Among those affected is Kibo Mining Plc, a Galway, Ireland-based precious-metals explorer. Kibo said Friday it hasn’t yet received any proceeds from a share placing carried out by Beaufort, which was intended to raise about 750,000 pounds.