Clients of failed stockbroking firm BBY face losses of $10 million and the company may have been trading while insolvent since mid-2014, its administrators say.
The firm, which controlled more than $2 billion in funds, was placed in administration in May.
KPMG's Stephen Vaughan and Ian Hall have found indications of possible misuse of client trust funds, and evidence that its financial records were not up to standard.
"The above and other findings lead us to conclude that the BBY Companies may have been insolvent since June 2014," they said in their first report to creditors.
There is likely to be a shortfall of client funds in the order of $10 million, and unsecured creditors are likely to get between nothing and 24 cents in the dollar in return.
BBY failed because of poor governance, inadequate risk management, inadequate capital, trading losses and an inability of management to foreshadow and respond to adverse events and margin calls, the administrators' report said.
They recommend the creditors resolve to place the company into liquidation.
A second meeting of creditors is to be held on June 22.
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