WorldSpreads Group Plc (WSPR), a U.K. brokerage and spread betting company, said it has a shortfall of 13 million pounds ($21 million) of client money as it appointed KPMG LLP as an administrator to manage the business.This begs the question: Do you know where your money is?
WorldSpreads owes clients 29.7 million pounds and has about 16.6 million in cash, the London-based company said in a statement. The firm’s stock was suspended on March 16 after it discovered a hole in its accounts.
“Due to the accounting irregularities that have been discovered, it is likely that 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.”
WorldSpreads’s founder, chief executive officer and largest individual shareholder, Conor Foley, resigned March 14. Roger Hynes, a former managing director at CMC Markets Plc, replaced him as interim CEO. Niall O’Kelly resigned as chief financial officer in February as WorldSpreads said it would post a full- year loss after an “unusual pattern of client trading.”
Clients’ accounts were frozen on the afternoon of March 16, preventing them from withdrawing money or adding to their funds, according to Sorrelle Cooper, a spokeswoman for KPMG in London. Any open positions were also closed, she said.
WorldSpreads clients facing losses may have access to the Financial Services Compensation Scheme, which covers as much as 50,000 pounds per claimaint, the Financial Services Authority said in a separate statement.
The firm has about 15,000 client accounts and 66 employees, who will be initially retained “to support the orderly wind down of the business,” KPMG said. Redundancies are nonetheless probable, it said.
Mike "Mish" Shedlock
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