Anglo Irish Bank has argued it is entitled to £1.3 million sterling (€2 million) lodged at the direction of the Central Bank in a client account of the collapsed Cork stockbroking firm, W&R Morrogh. The bank claims the shares in London Stock Exchange Limited (LSE) were pledged to it by Mr Stephen Pearson, a partner with the firm, as security for a loan advanced to Mr Pearson.
The shares were subsequently sold in April 2001, around the time the firm collapsed and a receiver was appointed. The Central Bank directed the proceeds of sale be lodged to a client account.
Anglo Irish contends the Central Bank was ignorant of its claim when it made that direction and has brought a motion seeking the monies. The claim is being resisted by stockbroking firms because, they contend, the arrangement that Anglo Irish claims it had with Mr Pearson to take security gave no title to the bank. They also claim clients of Morrogh have a superior claim to the assets.
Mr Justice Murphy yesterday heard arguments from Mr Michael Cush, for Anglo Irish, for payment to the bank. Mr Cush said there were monies in accounts that represent the sale of the LSE shares. His client was entitled to those monies and there were no competing claims to those accounts. Mr Cush said it was wrong to say there was no evidence to show that any funds representing the sale of the LSE shares had been lodged to any particular accounts.
Mr Cush also argued that, because the bank was not a creditor of the firm but rather a creditor of Mr Pearson, the money in the account was not client money. His opponents were arguing it was client money because the Central Bank had directed it be lodged into a client account. However, the Central Bank was ignorant of the Anglo Irish claim when it made that direction.
Anglo Irish's motion is being heard in tandem with an application by Mr Tom Grace, receiver to Morrogh and manager over its assets, for directions as to how the firm's €6.2 million in assets should be distributed.
Some 2,500 claims have been made against Morrogh, which collapsed in April 2001 with liabilities of some £12 million (€15.2 million). There are insufficient assets to meet the claims and stockbroking firms that are members of the Irish Stock Exchange must contribute half the amount that the Investor Compensation Company Limited will determine is payable to its fund to meet the claims.The hearing resumes on Tuesday.
