Worldspd Share Discussion Threads

[allstar_07] 17/3/2012 15:46

I was told I could close positions but nothing else. I decided tp keep them open in the hope a knight in shining armour comes in and I can keep all my positions etc. Otherwise ill have lost all my spread charges and have to reopen elsewhere.can't see advantage of closing positions unless you actually want to as part of your trading. What's everyone else done?

[pineapple1] 17/3/2012 14:48

Do Proffesional clients benefit from the £50k FSCS protection in the event of World Spreads administration ,even if their funds were pooled legit with WS funds due to their categorization.

[m.t.glass] 17/3/2012 14:09

Where do the WS bosses (and very recent quitters) live? I might want to pop round and repossess whatever I can get my hands on - or occupy till paid to go away.

(and I'm one of the lucky ones with only a small sum tied up)

[capitalspreads] 17/3/2012 14:08

count

you obviously have a large sum of money and are using it to trade derivatives (in this case presumably spread bets) ETX quite rightly therefore probably stated "well actually you are professional, you are taking large positions and you are asking us (ETX) to back you up with our money with our brokers (somebody has to put up the margin for hedges, if you do not allow your money to be used in this way then the SB company must use theirs), ETX presumably could not afford to do this sosaid either you must classify yourself as non segregated or you must trade with someone else"

you did not like this (for some reason) and went to a company that did apparently give you this retail protection (or at least claimed they did). Even though, if you looked at their accounts, they were not exactly cash rich. You must also have wondered why ETX did not change their minds when faced with losing such a big client.

If you plainly are professional you should ask "why is someone offering me something unusual" given the size of their company. some of the bigger SB companies have much greater resources (which is why bigger clients should be with them not with the small fry).

please dont call a company crooks when they have done exactly what they should and what the FSA requires them to do.

[cocktail] 17/3/2012 14:01

unfortunately the maximum payout from FSCS will be £50,000- the limit for deposits is £85,000 but money with WSPR is not treated as a deposit (only banks take deposits).

[surpjt] 17/3/2012 13:43

The practicalities of segregated (or ring-fenced) client funds are discussed by capital spreads and Hirose Financial UK on this MFGlobal thread, and appears to boil down to the company's own willingness to enforce the segregation.

The problem of enforcement is shown by the WS movement of funds apparently having survived an Ernst & Young audit (whereas in MFGlobal the movement occurred suddenly within one week).
The FSCS compensation limit is £50k for investments not £85k.

[baldeagle5] 17/3/2012 12:54

Count - with you there brother on the action front. It is beyond belief what occurs in the City really. The biggest crooks of them all masquerade as your friends.

I would be very careful with ALL spreadbetting firms and do not for a moment think you are safe with IG.

[nasdaq_investor] 17/3/2012 10:17

Are customers (both professional and retail) entitled to the 85k compensation through the FSCS on top of any distribution if it goes into admin?

I gather they are hoping to do a deal with third party takeover with FT reporting London Capital & ETX as potentially interested parties but with the FSA favouring IG because of their resources. Takeover of clients accounts / continued operations is in the interests of the industry but it all depends on what the size of the deficit is in relation to the £6m cash held.

[nasdaq_investor] 17/3/2012 09:00

Grateful if someone who knows about these things can enlighten with a few answers although I appreciate it's hard without knowing the reality.

Got about 200k in various stocks and paid a lot of margin so liquidation value about 170k.

FT are suggesting IG, Capital Spreads and ETX as possible buyers but would the assets just transfer over without any loss to the client to any acquirer? I appreciate it depends on what they pay. All depends on what they perceive a client base of 5,000 or so is worth. Is a non-painful (for clients) takeover realistic given (based on the FT) the takeover company would have to pay about 5m to balance the books? (About £6m should be still be there in cash and if there is a black hole of 10 to 12m that leaves between 4m to 6m deficit). Or is there a scenario where the takeover company just takes the accounts in a pre-pack - what would s/bet account holders get then?

If no takeover do they just liquidate all assets and clients - retail and prof get paid out as creditors pro-rata and claim the deficit (50k for Professional and I believe 85k for retail) from the FSA?

Any chance of suing the auditors if, as alleged in the FT, they audited whist alleged fraud took place?

Any difference if there is a takeover situation for retail clients and professional clients? I'm a retail client although they did try to get me to sign-up for prof client status but I advised my circumstances didn't fit.

Sorry for the simplistic questions and multiple questions but my mind is a bit middled after all this.

I think Spreadex just took-over MF Global client list but not the actual accounts i.e. a mailing list in the hope broke clients would trade with them.

[m.t.glass] 17/3/2012 07:35

from this morning's FT version of events, it does sound like an internal fraud, rather than any careless mishap or big wins by lucky clients on bets that weren't hedged:


Shares in Worldspreads were suspended on Friday after the spread betting provider's new executive team uncovered accounting irregularities, which sources close to the situation say is a suspected accounting fraud allegedly carried out over more than a year.

Nearly 5,000 clients of the company were unable to withdraw funds from their accounts after the accounting problems were discovered Friday morning.

The London-listed company allegedly mixed client funds with its own, allegedly leaving a substantial shortfall that is unlikely to be met from its cash reserves. The suspected shortfall in the client accounts is estimated to be £10m-£12m, says one person close to the situation.

The Financial Services Authority despatched a team to Worldspreads' London office on Friday, while a team from KPMG was sent to advise on a restructuring process. People close to the situation said that work would continue over the weekend to establish whether the company would enter insolvency proceedings, or be sold through a pre-pack administration. The result of the process is expected to be announced on Monday.

People close to the situation said that Worldspreads' clients were likely to include a number of small spread betting operators, raising the possibility of a broader problem at the smaller end of the sector.

Ernst & Young, Worldspreads' auditor, signed off on at least one set of annual accounts since the beginning of the period when the alleged fraud was being carried out, according to people close to the situation. E&Y confirmed that Worldspreads was a client, but said it could not comment for confidentiality reasons.

The discovery came two days after the abrupt resignation of Worldspreads' founder, Conor Foley, who announced his departure on Wednesday after 12 years as chief executive. Niall O'Kelly, financial director, left the company on the same day. Neither has been accused of any wrongdoing.

"It's hit us with enormous force in a dark tunnel," said Lindsay McNeile, chairman of Worldspreads. Mr McNeile, who assumed an executive role on Wednesday, said the new management team had uncovered accounting irregularities on Friday morning, and had informed the market as swiftly as possible. "We don't yet know the ramifications," he added.

Worldspreads did not comment in relation to the allegations.

Worldspreads, one of only three spread betting companies listed in London, was founded in Ireland in 2000, and floated on London's Aim exchange in 2007. It warned last month that it was likely to report a loss for the current financial year, blaming an increased number of successful bets by clients, leading to high payouts.

IG Group, London Capital Group and ETX Capital were suggested as possible bidders by people close to the situation, but this speculation was not confirmed by either company. A person close to IG Group said that it had little need to acquire Worldspreads, because many of the latter's clients also had accounts with IG Group.

A person close to London Capital said that it would be "very interested" in a takeover of Worldspreads, while noting that the FSA was likely to prefer an absorption by IG Group, by far the biggest company in the sector.

Shares in Worldspreads were suspended at 37p, valuing the company at £14.7m.

[m.t.glass] 16/3/2012 21:14

H Eagle - that presumably covers money deposited - which constitutes a minor part of the exposure obtained and the losses that such exposure might bring, which wouldn't be covered.

[horndean eagle] 16/3/2012 20:09

You should all generally be fine if you have less than 85k deposited. Doesn't matter how the amount has come about. The compensation referred to above is from mis-selling. The one that applies here is the FSCS. It may take time for it to get sorted out though. That is if there is a very significant hole in the accounts. If not then you could see a quick return but my money would be on the former.

[thekop] 16/3/2012 18:19

hi steve i got the following info from fsa site hence my query:

Compensation is only paid to cover financial loss, so for investment claims the compensation paid will try to return you to the financial position you would have been in had you not invested.

Anyway worst case surely another spread betting firm will likely take the oppurtunity to increase client numbers by taking control of the segregated accounts

[thekop] 16/3/2012 17:57

hi guys i also have funds which i cant withdraw. I have 10k. 5k of which is profit and 5 my own money. Will fsa only compensate me for my original investment amount ie 5k and not the full current balance including profit of 10k?

really would appreciate any advise

[lloyd j] 16/3/2012 15:39

Cant trade or withdraw funds just after i got stopped out on a dow short earlier and now falling!!

Funds are protected under FSA they told me up to £50k

[sjcsystems] 16/3/2012 14:59

Client money should be safe because they are FSA regulated and therefore client money is segregated. If you were classified as a professional client then you may have opted out of this protection, however that's the exception.