WorldSpreads to be closed over alleged fraud

martyoo

WorldSpreads, one of the UK’s largest spread betting operators, is to be wound up after the discovery of an alleged accounting fraud that left up to £12m missing from its clients’ accounts.

Shares in the company were suspended on Friday after WorldSpreads informed regulators of accounting irregularities. People with knowledge of the matter said that money from client accounts, which should be segregated, had been mixed with the company’s own funds.

Link

Anyone here with them? Apparently customers have been unable to withdraw funds since Friday.

crapmanjoe

I would imagine most Irish people who used to trade with WS transferred to market spreads as part of the restructuring 2 years back.

Have to say I'm in shock at the news, I knew the CEO and CFO personally.

ixus

It looks like another MF Global style event. There will probably be a lot of this.Where there's one cockroach....

Thepropertypin will probably be on top of this so worth keeping track of both forums if anyone is affected.

ixus

Latest:

Worldspreads to be wound up after alleged fraud

.......The first £50,000 of each account is protected under the Financial Services Compensation Scheme, but clients who are owed larger sums – a group likely to include some other spread-betting companies – might not receive the full value of their accounts........

Timmaay

And now Marketspreads seem to be in serious trouble, here is an email they sent me yesterday:

Dear Client

Today, Easter Thursday, at about 4pm we received an instruction from the Central Bank to suspend trading despite the fact that we are profitable, solvent and all client funds are properly segregated.
We went to the High Court to at the very least achieve a stay on this completely unexpected Bank instruction but the judge could not see anything unlawful with the Bank’s actions and we are now forced to suspend client trading and close all open positions.
We are in the process of closing down all client positions and will do so as fairly and efficiently as we possibly can.
Despite the fact that two weeks ago the Bank affirmed that our client funds are properly managed, they have instructed us not to release any funds to clients until they authorise us to do so.
On Tuesday next, another independent report by Grant Thornton to verify client funds is being delivered to the Bank. This report, ordered by the bank last week and paid for by us, is expected to say that client funds are properly segregated, managed and intact. We understand that if the report is satisfactory that the Bank will then authorise us to release any funds requested.Should you wish to have your funds remitted back to you, let us know by return.
As soon as the Bank authorises us to release funds we will do so immediately.
All the staff and directors of MarketSpreads are highly appreciative of your loyal custom and regret any inconvenience caused to you.
We hope that business may return to normal in coming weeks.
Yours sincerely,

MarketSpreads Directors and Staff

I never have too much money in a spreadbetting account anyways, only enough to cover my stop loss, but things like this don't aspire much confidence at all!

ixus

I've verified the above post/email with an individual who has an account with Marketspreads.

delux

Yea i got the email too. I can still login and my positions are still open, but i won't lose any sleep over it. We'll see what happens next week. I wonder why the Central Bank told them to suspend trading though, i'm curious about that.
Because it would be a strange situation if they close our positions and then re-open next week as if nothing happened :rolleyes:

Roonbox

delux wrote: »

Yea i got the email too. I can still login and my positions are still open, but i won't lose any sleep over it. We'll see what happens next week. I wonder why the Central Bank told them to suspend trading though, i'm curious about that.
Because it would be a strange situation if they close our positions and then re-open next week as if nothing happened :rolleyes:

Some of my positions have been closed out, I think the plan is to close them all out next week. This isn't something that's going to go away quickly, your funds are now trapped there until you hear otherwise..

Its a shame as I've always liked Marketspreads but its finished for me...

I also have an account with ig index and will be moving completely to them now.

ixus

Given market closure today and a lot of markets on Monday, closure of accounts will probably be completed on Tuesday. Hopefully US jobs report hasn't adversely affected positions.

Roonbox

ixus wrote: »

Given market closure today and a lot of markets on Monday, closure of accounts will probably be completed on Tuesday. Hopefully US jobs report hasn't adversely affected positions.

Some people will def take a hit on this...I've had a short on the Nasdaq for a few weeks now which will prob come to fruition while I'm closed out of the market.. Definitely not ideal

Timmaay

Roonbox wrote: »

Its a shame as I've always liked Marketspreads but its finished for me...

Yep, definitely a shame, I have tried afew different spreadbetting companies and I found Marketspreads the best of them by far, in terms of reliability, customer services etc. Also, having a minimum bet of 20cent, (instead of 1euro with most other spreadbetting companies) did wonders for my moneymanagement ha, I'm still only a beginner and like to keep my bets small enough!

liammur

Roonbox wrote: »

Some people will def take a hit on this...I've had a short on the Nasdaq for a few weeks now which will prob come to fruition while I'm closed out of the market.. Definitely not ideal

What level is your short at ?

Sharehunter

I do feel sorry for Market spreads. I have nothing but praise for them as they really do look after their customers. Something that lacks in many other industries in Ireland.
I get the impression the suspension is as a result of some legacy from Worldspreads so here's hoping they can start trading again very soon.
Very damaging to their business particularly if they are innocent parties to the Worldspreads shennanigans.
Still I wouldn't move from them as I wouldn't get the same level of support from any other company.

Sharehunter.

liammur

Sharehunter wrote: »

I do feel sorry for Market spreads. I have nothing but praise for them as they really do look after their customers. Something that lacks in many other industries in Ireland.
I get the impression the suspension is as a result of some legacy from Worldspreads so here's hoping they can start trading again very soon.
Very damaging to their business particularly if they are innocent parties to the Worldspreads shennanigans.
Still I wouldn't move from them as I wouldn't get the same level of support from any other company.

Sharehunter.

They are finished imo. I hope the Central bank know what they're doing as it would be terrible to hammer them solely on the back of irregularities in Worldspreads.

crapmanjoe

liammur wrote: »

They are finished imo. I hope the Central bank know what they're doing as it would be terrible to hammer them solely on the back of irregularities in Worldspreads.

Funny that people are critising the Central Bank for acting before the whole thing blows up. Actually think that its about time they try and act before the horse has bolted.

Marketspreads have been unable to provide an auditable balance sheet for the period ended Dec 21st 2009 (the day they bought out the old WS Ireland). If at this stage they still have not got their finances in order then they should be definitely shut down. Allegations of massive director fraud in that company as well and they are all members of the old WS Ireland and followed the same suspect client money practices. Lets not try to paint them in an overly sympathetic light.

Their other main problem is that the FSA (and I assume our own regulators here) have no idea how to manage spread betting companies. The companies can get themselves in a hole so quickly if they dont have an effective hedging strategy that the regulators dont know how to deal with them.

I wouldnt be surprised to see the FSA come down like a ton of bricks on some other companies in the UK.