But prospects do not look so dire for the firm's 400 clients, who could recoup between 90 and 100 per cent of their investments, according to the liquidator, Keith Goodman of the chartered accountants Leonard Curtis.
'There could be a full return,' Mr Goodman told a creditors meeting yesterday. 'It's still a moving target.'
The nearly 50 clients and creditors assembled at the meeting were told that the client accounts were in deficit by only pounds 249,034, just over 5 per cent of the total pounds 4.4m they had invested. Mr Goodman said clients might be repaid by end-June.
'I am now looking forward to a rapid repayment of the majority of debts,' he said.
In June 1992 DCL discovered that its senior back office manager had lost pounds 393,000 in unauthorised and fraudulent trading - a blow from which the firm never recovered.
Mr Coakley, the director, then sacked all back office staff, installed an independent back office manager, and in the past 10 months raised extra funding to bolster DCL's faltering liquidity, Mr Goodman said.
David Coakley Ltd set up in 1986 as a futures trading broker, and established a unique high-tech trading room in which private clients could do their own trading. The firm advertised in national newspapers and ran competitions designed to whet the appetites of prospective investors.
DCL was profitable until early 1991. But when it posted a small loss in 1991, it raised the concern of the industry's self-regulating body, the Securities and Futures Authority.
The SFA began to investigate the firm in April 1992, after discovering discrepancies in client accounts. In December, it banned the firm from carrying on private client investment business.
Last month, the SFA found that DCL had insufficient funds and agreed with DCL that it should cease trading.
Clients wanted a speedy payout and said they were surprised by the closure, having no inkling of any problems at the firm. Several who invested with DCL after the SFA knew about the fraud of June 1992 said that they were prepared to take action against the SFA if they did not receive full compensation.
'The SFA has a lot of explaining to do,' said one client.
One man, 50, said he had lost pounds 90,000 in his three years of investing with the firm but another, aged 63, said he had made about pounds 12,000.
Mr Coakley, Stuart Blake, dealing director, and five other DCL employees face an SFA disciplinary tribunal.Reuse content