Administrators find £13m black hole in WorldSpreads accounts
Monday 19 March 2012
Customers of a spread betting firm are likely to be left seeking compensation after an estimated £13 million black hole in its accounts was revealed today.
WorldSpreads, which runs online and telephone trading services, was placed into administration over the weekend after "accounting irregularities" were found.
Administrators at KPMG said the group's 15,000 customers were owed £29.7 million but the group has only £16.6 million of cash, leaving them facing a large shortfall.
However, customers may be reimbursed up to £50,000 by the industry's Financial Services Compensation Scheme, depending on their circumstances.
On Wednesday, chief executive and co-founder Conor Foley resigned, two weeks after chief financial officer Niall O'Kelly stepped down following a profits warning.
Its shares were suspended from trading on the Alternative Investment Market on Friday.
Redundancies among the firm's 66 staff - most of whom are based in London - are likely as administrators wind down the business. WorldSpreads is based in London and its parent company is in Dublin.
The Financial Times reported that WorldSpreads mixed money from customers' accounts, which should have been segregated, with its own funds.
The industry's compensation scheme pays up to £50,000, mainly for individuals and small firms. But some of its clients, including other spread betting firms, are believed to be owed larger sums, raising the prospect of a lengthy legal struggle.
The Financial Services Authority said: "Clients should be aware that any shortfall in the client money accounts will impact the amount of money that can be returned."
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