Worldspd Share Discussion Threads

[lbo] 29/3/2012 10:50

FINANCIAL SPREAD-betting business MarketSpreads has settled its case against two former executives who diverted funds from the company to another firm in which they were involved.

Just over eight weeks ago, MarketSpreads told the Commercial Court it intended to seek judgment against former chief executive Brian O'Neill, of The Copse, Beresford, Dublin, and Fergus Rice, of Pembroke Road, Dublin, for €1.7 million.

The court heard that the MarketSpreads board discovered late in 2010 and early in 2011 that advances, totalling €1.4 million, had been made to Sports Spread Betting Ireland, in which Mr Rice has a 60 per cent stake and in which Mr O'Neill is also involved.

[someuwin] 29/3/2012 10:02

RNS Number : 3413A
Worldspreads Group PLC
29 March 2012
WorldSpreads Group plc
("WorldSpreads" or the "Company")
Receiver Resignation
WorldSpreads announces that Mr Jim Hamilton of BDO, Beaux Lane House, Mercer Street Lower, Dublin 2 (the "Receiver"), who was appointed as receiver and manager to the assets and undertaking of the Company on 23 March 2012, was on 28 March 2012, discharged from his appointment as receiver and manager in respect of the assets and undertaking of the Company.

[miata] 29/3/2012 08:24

E&Y reckon they complied with their remit legally.

That that remit is limited has been contentious and the subject of much legislation and court cases. The most famous of which implied their role is not that of a bloodhound: Case: Kingston cotton mills company (1986)

[mikeja] 29/3/2012 07:44

E&Y were also auditors of Olympus in Japan.However a four man "independent" committee appointed by E&Y found there was nothing wrong in their conduct.
Olympus for anyone who may not know hid hundreds of millions of losses for many years.I suggest that if anyone is thinking of investing in a company they check to make sure their auditors are not E&Y

[horndean eagle] 28/3/2012 15:44

Does anyone know whether they have started to liquidate positions or not yet?

[miata] 28/3/2012 13:54

I received KPMG LLP's schedule of Worldspreads' white label agreements today:

Agincourt Spreads
Alecto Spreads
Alexander David Spread Betting
Alpesh Patel Spreads
Alpha Markets
Aurora Global Markets
BetVictor Financials
Financialspreadbetting.co.uk
Fitzdares Financial Spreads
Guardian Trades
JN Spreads
Ladbrokes Financial Spreads
Oakleaf Markets
Spreads.gr
Squaremile
Star Financials
Sterling Markets
Tam Spreads
TM Fleming Spreads
Tower Spreads
TrendWatch Asset Management (TAM)
TwoWaySpreads
Victor Chandler Financials
Worldspreads Private Client Services

[mikeja] 27/3/2012 12:52

Check out the E&Y website,article "Risk investment levels linked to financial performance",yes we noticed that thanks.

[joe moon] 27/3/2012 11:21

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email [e-mail] to buy additional rights.

Asked in 2008 for his favourite piece of business advice, Conor Foley, chief executive of the spreadbetting group Worldspreads, replied: "Look after the downside and the upside will look after itself."

Four years later, the failure of Mr Foley's company to "look after the downside" has left it in the hands of administrators from KPMG, who are faced with a £13m gap between the company's cash balance and the amount that it owes clients.


The company's demise happened quickly. Mr Foley and Niall O'Kelly, financial director, resigned abruptly on March 14.

Two days later Worldspreads suspended its shares, citing "financial irregularities".

Last Monday the company announced its insolvency, warning that it had only £16.6m with which to repay customer accounts of £29.7m.

While Mr Foley denies any knowledge of the irregularities, industry observers say that his aggressive growth drive had raised eyebrows long before last week's closure of the company.

Worldspreads, which floated on Aim in 2007, was a company intent on global expansion. In July 2008 Mr Foley, founder and chairman of the Irish International Business Network, said "there are 100-plus countries where we believe we could expand this [company] to" – days after announcing annual revenue of just €12.3m.

Its hunger for growth prompted Worldspreads to sell its Irish division, the original core of the company, to management in 2009 for €11.1m – just 2.6 times the division's pre-tax earnings for the previous full year. The Irish business's pre-tax profit of €4.3m accounted for nearly all the group total of €4.6m in the year to March 2009, but Worldspreads said it doubted that the group could stay so profitable given worsening economic conditions in Ireland.

The company pumped much of the sale proceeds into expanding in southern Europe, while also fighting for a bigger share of the UK spread betting market. Its marketing expenditure increased from €580,000 to €3.2m between the 2010 and 2011 financial years, wiping out profits yet failing to produce the higher predicted revenues.

The constant disposal of "non-core" divisions enabled Worldspreads to boast of double-digit increases in revenue from the remaining parts of the business. But this masked declining profitability. In its latest interim results, published last November, Worldspreads reported revenues of €8.3m from continuing operations and an operating loss of €596,000.

Worldspreads was also struggling to keep up with the technological innovation of bigger rivals such as IG Group and CMC Markets. "We didn't see them as much of a threat – their platform was pretty slow and clunky," says the chief executive of one competitor.

For the last 18 months, Worldspreads had offered "zero spreads" for some of the most popular bets. This innovation reflected the company's excessive risk appetite, says Justin Bates, an analyst at Keefe, Bruyette & Woods.

Spreadbetting companies typically hedge large exposures to their customers' bets by taking offsetting positions in the market, while making money from the "spread" between the prices paid by customers to buy and sell a position.

However, in the absence of a spread, Worldspreads could make money from its clients only by taking the other side of their bets – effectively adopting the traditional bookmaker's model. In an extended market rally – such as the one early this year – a spreadbetting company with large unhedged exposure to its clients' long positions is likely to face substantial losses. This may have been the final blow that forced Worldspreads to declare insolvency, Mr Bates says.

KPMG's administrators expect it will be several weeks before they can say how the £13m shortfall in Worldspreads developed. But people close to the situation suspect that the company may have dipped into supposedly segregated client accounts over a period of years, allowing it to disguise the extent of its losses. Unlike listed peers IG and London Capital Group, Worldspreads never gave details of the funds it held on clients' behalf in its annual results statements.

Others in the industry worry that Worldspreads' collapse – coming only six months after the bankruptcy of MF Global, another spread betting provider – could damage the reputation of the sector as a whole.

Operators have rushed to distance themselves from the controversy, stressing their own high standards of compliance. "It's a disappointment when another company lets the industry down," says Tim Howkins, chief executive of IG.

Meanwhile, many of the company's 5,000 clients are asking how regulators and Ernst & Young, Worldspreads' auditor, failed to spot the irregularities earlier.

Twenty clients with between £100,000 and £3m trapped in the company say they are considering legal action against E&Y and Worldspreads' directors, who include Charlie McCreevy, a former Irish finance minister.

"A lot of depositors will be very scared now," says Nirav Shah, one of the high-value clients. "Regulation needs to be made tighter so this doesn't happen again."

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[old giggleswickian] 27/3/2012 11:06

guidfarr,
Not sure one is supposed to c&p articles like that but if you search for "legal action against E&Y and Worldspreads' directors" in Google it will get you to the full article at the FT.

Ian.

[guidfarr] 27/3/2012 10:55

can someone post the full article please? I can't seem to view it

[joe moon] 26/3/2012 18:56

Old Etonian chairman Lindsay McNeile



won't be much chance of criminal action then

[m.t.glass] 26/3/2012 15:15

26 March 2012


Simon Cawkwell, the iconoclastic investor who goes by the nickname Evil Knievil, is owed £150,000 by collapsed spread betting firm WorldSpreads.

That such a well-known figure is on the list of creditors will raise interest in the City about which other names are caught up in the scandal surrounding the firm....

...Cawkwell said that he had been due to meet with WorldSpreads chief executive Conor Foley and its Old Etonian chairman Lindsay McNeile - whom he has known for more than 20 years - over an account dispute before the collapse.

He said: "My total losses from failed stockbrokers and spread-betting firms over the past four years is around £1 million." He expects to see around £25,000 of the cash he is owed by WorldSpreads....

[nasdaq_investor] 26/3/2012 09:45

Richardsj2 - ah, pity. Wonder if any other assets of value.

Subscription only but this link intrigued me. Says 'resolves.' Have KPMG got some of this 1.5m euro back? Probably an old article despite the '2 days ago' reference and unrelated as otherwise clients would have heard I assume.

Market Spreads resolves €1.5m row with former group company ...
www.businesspost.ie/#!article/7bfb0a00-2702-454f-a76d...
2 days ago – A row between Irish financial spread betting firm MarketSpreads and AIM listed WorldSpreads over a deferred payment due from the Irish ...

[old giggleswickian] 26/3/2012 09:35

I have been filtered for worse offences than saying my piece but having been erroneously outed as a director of this company the earlier posting merits reposting. I am no troll, some people just aren't as righteous as they make out.
steveglobal4 - 18 Mar 2012 - 13:18:41 - 214 of 479
I already took tens of thousands in losses friday afternoon as i had to sell down my tanfield (tan) position on worldspreads to cover margin calls, which then made me have to sell tanfield in my ig holding


Ian.

[nasdaq_investor] 25/3/2012 21:24

Wonder if KPMG will retrieve any assets from these European offices plus Malaysia. These might have been trading as subsidiaries :-

WorldSpreads are a leading spread betting company, headquartered in London, England and with European offices in Germany, France, Sweden, Denmark, Greece, Hungary, Slovenia, Spain and Portugal. In 2008 WorldSpreads opened its first office outside of Europe with its Asian office, which opened in 2008 and is based in Kuala Lumpur, Malaysia.