Broker involved with BHS takeover is forced into administration as regulator calls time

CITY broker Pello Capital has collapsed into administration after the City watchdog banned it from conducting regulated activities for a second time.

The small-cap broker, which helped the serial bankrupt Dominic Chappell raise funds to buy BHS from Sir Philip Green, has appointed Evelyn Partners as administrators following the financial regulator’s intervention, The Daily Telegraph understands. The Financial Conduct Authority issued a notice on Wednesday that restricted Pello from carrying out regulated activities or taking any action that would diminish the value of its own assets.

The regulator declined to comment on its decision to censure the broker, but the move forced Pello Capital to call in administrators, drawing to an end its time as a controversial City broker.

The FCA put the broker under similar restrictions last year but lifted them after several months.

Pello Capital, which started to accept fee payments in cryptocurrencies earlier this year, was formerly known as Cornhill Capital and was fined £210,000 by the London Stock Exchange in 2017 over a share placing fiasco. Cornhill was acting as a broker for Aim-quoted New World Oil & Gas when an investor bought half the company’s shares in his mother’s name.

It was the first time an LSE member firm had been named and shamed for nearly two decades for breaking the exchange’s codes of conduct.

Cornhill was founded by Andy Frangos, who told MPS in 2017 that Mr Chappell’s plans for BHS were “a bit of a punt”, adding that he had dropped a legal case over unpaid fees because he didn’t think the businessman had any assets. At the time he said: “We have what we consider to be an absolute solid case, but we don’t think he’s got any assets that we’ll be able to recover so we decided to just fold our hand and move on, frankly. Total disaster from our point of view, but we just wrote it off and moved on.”

Daniel Gee, managing director of Pello Capital, said: “We were subject to a takeover approach by a large public financial technology company (nonuk). Despite our best efforts to garner support from the FCA to complete the transaction we were not successful and the deal had to be aborted.

“We then were given restrictions for the second time after having the original restrictions rescinded by the FCA regulatory decisions committee in 2021. Unfortunately, without us being able to conclude our refinancing and working under blanket restrictions, it is no longer possible to operate.”

Evelyn Partners was contacted for comment.