04/17/2012 : UNDISCLOSED TRADES AT MARKETSPREADS (Update)
Former owners have some questions to answer
The current management of suspended spread betting firm Marketspreads are still trying to get the Irish Central Bank to let them return to normality, as the news spread this week that accounts filed by the company showed that former directors and executives engaged in undisclosed trades.
The Irish Times reports that returns for the nine months ended December 21st, 2009, the period immediately before the current owners took over the business, re-state revenues, profits and assets.
The directors’ report accompanying the accounts claims that “certain former directors and executives of the company had been engaged in significant and previously undisclosed trading activities with the firm”.
Irregularities discovered in accounts dating back to the 12-month period up to March 31st, 2009, meant that the directors had to re-state at Euro 6.3 million, Euro 1.7 million short of the Euro 8 million figure originally reported.
Similarly, the company had to re-state profits for that year at Euro 1.5 million, down from Euro 4 million, and retained profit at Euro 1.1 million, down from almost Euro 8 million.
The irregularities discovered by the current directors, who were not involved with the business during the period covered by the accounts, meant that auditors Ernst & Young could not give an opinion on the financial statements.
The Times reports that late last month, former Marketspreads chief executive Brian O’Neill and his colleague Fergus Rice agreed to judgments against them for Euro 1.68 million in the Irish High Court. The duo led a buyout of MarketSpreads from its original parent, Worldspreads plc, in December 2009.
"They left MarketSpreads midway through last year after the board discovered that they had diverted Euro 1.4 million from the company to another business in which they were involved. The judgement included the principal sum and interest," the newspaper notes.
The current CEO at Marketspreads, John McNicholl, has emailed clients advising them that he is hopeful that the Central Bank will allow the firm to resume operations within weeks.
Marketspreads recently initiated legal action against Worldspreads – currently in administration after a shortfall in client funds of GBP 15 million was uncovered – for misrepresentation and breach of warranty.