Stock held by the receiver of failed Cork stockbroker W&R Morrogh has more than trebled in value in recent times, leaving its former customers in a quandary.
The clients, members of the Morrogh Action Group, are planning an appeal to the Supreme Court over a High Court ruling that receiver Mr Tom Grace of PricewaterhouseCoopers is entitled to use claim expenses associated with the process from customers' nominee accounts.
At the time of the High Court ruling, Mr Grace said the nominee accounts, which were frozen when the firm collapsed, held stock valued at around €5 million. Expenses associated with the receivership, including various court actions, were estimated at €3-€4 million.
Former clients have now been told informally that stock in the accounts is worth closer to €16.5 million - more than three times the earlier estimate. However, they have so far been unsuccessful in getting Mr Grace to confirm the latest valuation on the value of the funds he controls.
Stock markets lost money for 18 months following the collapse of Morrogh but have recovered this year. The situation of the nominee accounts at Morrogh have been affected especially by the dramatic recovery in the price of shares in US technology company EMC.
The company has a facility in Cork and many staff held EMC stock, much of which was lodged in nominee accounts at Morrogh, the only Irish stockbroker based outside Dublin at the time. This time last year, EMC shares were languishing at €3.71 but they have risen sharply this year and last night closed at €14.01.
The action group has now called on Mr Grace to put in writing the current value of the stock in the accounts.
The state of the accounts is likely to affect any final decision by customers to pursue further court action. They were angered by the High Court decision as it is unclear whether they will be able to recover such money from the Investor Compensation Company Ltd, the body set up to protect investors from losses due to collapses like that of Morrogh.
With most of the stated value of the funds going to cover the costs of the receivership, the action group felt it had nothing to lose by pursuing its claim in the Supreme Court.
If it transpires that there is now a far more substantial pool of money in the nominee accounts, members of the action group might reconsider their approach as the costs of any Supreme Court action could deplete what would be a larger fund.
The accounts were frozen when the firm collapsed in May 2001 after it emerged that junior partner Mr Stephen Pearson had used client money in a bid to extricate himself after positions he took on his own account went against him.
