Saturday March 16,2013 : INVESTMENT BROKERS TO COUGH UP ON WORDSPREADS DEBACLE (Update)
Multi-million sterling levy will be used to compensate clients
British investment broking firms will soon have to cough up a substantial Financial Services Compensation Scheme levy in order to reimburse victims of financial companies gone awry, one of them the online financial betting company Worldspreads.
Quoting the FT Adviser, the newspaper reports that investment brokers in Britain face a possible GBP 20 million to levy to pay compensation to clients, including those who lost money in WorldSpreads, the Irish-founded spread betting firm that closed last year with GBP 13 million missing from clients’ accounts .
WorldSpreads went into bankruptcy in March 2012 after it emerged it had less than GBP 17 million put aside to cover the GBP 29.7 million of client funds, as required by its operating licence. The company's chairman, Lindsay McNeile, gave evidence that the company had mixed client money with its own, while falsifying its accounts to hide mounting losses.
KPMG, the special administrators appointed in the Worldspreads case, said clients with less than GBP 50,000 held on account by WorldSpreads would not get any more from the administrators or the FSCS once they had been paid their agreed balance by the FSCS.
“The joint special administrators have made provision for any clients who disagree with their balance. Following resolution of such claims, any payment due will be made in respect of these amounts,” said KPMG.
Late last year the High Court in London approved the first distribution to clients of WorldSpreads Ltd of three pence in the pound, while the joint special administrators declared a second distribution to clients of five pence in February 2013.