Worldspreads missing £13m

WORLDSPREADS, THE financial spread betting company with its headquarters in Dublin, has a shortfall of £13 million (€15.6 million) of client money, the company said.

Worldspreads, which went into administration in the UK on Sunday, owes clients £29.7 million and has about £16.6 million in cash, it said yesterday.

The company’s shares were suspended and clients’ accounts frozen on Friday after Worldspreads informed regulators of financial irregularities understood to involve the mixing of money in client accounts with the company’s own funds.

Worldspreads founder Conor Foley resigned as chief executive last Wednesday.

Mr Foley said yesterday that his decision to step down was “completely unrelated” to the financial irregularities, which he said he had only learned of on Friday morning at the same time as the rest of the Worldspreads board.

“He had been working closely with the executive team on a handover process on Friday last when the irregularities were discovered,” a statement issued on his behalf indicated.

Mr Foley said he did not wish to add to his statement and referred an inquiry from The Irish Times to his public relations adviser. The spokesman said he believed there was likely to be an investigation into the handling of client money at the company, but that as far as he was aware the former Worldspreads chief executive had not been contacted by regulators examining the matter.

Mr Foley’s exit followed the resignation of chief financial officer Niall O’Kelly in February.

The company noted in a trading statement last month that it had been experiencing an “unusual pattern of client trading”. Worldspreads, which had about a 3 per cent share of the UK financial spread betting market, is set to be wound up.

Worldspreads.comhas been disabled, with a notice directing visitors to the site to contact the administrators, KPMG.

Any open positions on spread bets held by clients have been closed, according to KMPG, while clients who face losses may have access to a compensation scheme operated by the Financial Services Authority, the UK financial regulator indicated.

“Due to the accounting irregularities that have been discovered, it is likely there will be a shortfall to clients,” KPMG said in a separate statement.

“One of the immediate priorities of the special administrators will be to investigate and attempt to reconcile all client positions in order to establish the extent of the shortfall.”

The hole in the company’s accounts was higher than initial estimates of £10 million to £12 million.

Mr Foley, who owns about 18 per cent of the company, is set to be among the financial losers as a consequence of the firm’s collapse.

The firm has about 15,000 client accounts and 66 employees, who will be initially kept on to support the “orderly wind down” of the company, KMPG said.

Roger Hynes has replaced Mr Foley as interim chief executive.

Worldspreads was founded in Dublin in 2000 and had listings on London’s AIM market and Dublin’s ESM market. The Irish division was sold to local management in 2009. Worldspreads Limited, the company now in administration, is based in London. But its parent company, Worldspreads plc, is incorporated in Dublin. – (Additional reporting: Bloomberg)