04/07/2012 : ANOTHER SPREAD BETTING FIRM IN TROUBLE
Ireland's Central Bank orders Marketspreads to cease trading
With interest in the spread betting genre high in the wake of the recent failure of Worldspreads, the mainstream media have picked up on a second company in trouble, reporting that Marketspreads has been ordered to cease trading by the Irish Central Bank due to concern for clients’ accounts.
The Bank said in a statement Friday that it had been working closely with the company’s current management team to address what it called "legacy financial issues", and revealed that the decision to suspend was made after concerns arose of capital inadequacy and proper management of client funds at Marketspreads.
The company has denied that there are problems in those areas, and says that it is trying to rectify management flaws perpetrated by the company's previous owners.
The Irish Examiner reports that last week, the company secured a judgment against former directors Brian O’Neill and Fergus Rice relating to the diversion of Euro 1.68 million to another business; while Euro 2.5 million has been pledged to increase the firm’s capital base.
The Central Bank noted that on accounts filed by the company to the end of 2009, auditors are "unable to express an opinion".
"In light of this, the Central Bank considers it necessary – in the interest of the proper and orderly regulation and supervision of an investment firm, and for the protection of investors – to suspend the activities of Marketspreads," the financial authority said.
In a response, Marketspreads management expressed disappointment at the "unfair and unjustified" decision that it claimed had resulted in "serious reputational damage."
A spokesman for Marketspreads said: "We request that the bank allows us to release funds to our clients at the earliest possible juncture next week and to work with us to restore our licence to trade."
The company said that a review – undertaken by professional services firm Grant Thornton – is due to be delivered to the Central Bank early next week, and proves that client accounts are being managed properly.
There is now the possibility of a hearing at the Financial Services Appeals Tribunal, but in the meantime Marketspreads managers are to meet with Central Bank officials.