WorldSpreads suspends trading on AIM and are following MF into administration by the looks of it. Anyone else got cash tied up?

I have been on the phone to them and they weren't particularly helpful. Would love to hear from fellow spread bettors how long it took to get money back from MF? And how much they got back?

Suggestion posted on another BB:


I've no idea how representative my own straw poll might be, but of 6 friends and acquaintances who have accounts with Worldspreads, all 6 have accounts with IGindex as well. IG presumably will not put a very high value on acquiring Worldspreads' customer list if the majority of Worldspreads customers are already with IG. The list would probably be of greater value to one of the other (newer) spreadbet firms who are still building.

On the other hand, those Worldspreads customers already known to IGindex will already meet IG's account-opening criteria, so IG might be happier to take over whatever stock positions those particular customers hold with Worldspreads. I wonder if IG might email all their own customers tonight offering them a smooth transfer of WS positions and balances to their IG account? Obviously IG would need approval of the investigators in order to do this - but IG could sell the idea to the regulators as the best way of halving the damage. If anyone fancies emailing IG to consider this, feel free to paste this post or part of it.

email ((helpdesk@igindex.co.uk)) minus the brackets

I agree, I don't think there would be any significant benefit for IG on acquiring WS especially until it becomes clear what has actually gone wrong and caused the profit warning/share suspension.

If the mgt have raided the client fund account then it looks like we will have to await the FSA supervising an unwinding of open positions and paying back to shareholders proportionately to their holdings. I would expect that up to a limit (not sure if that is around £85k per investor or £32k) there would be some compensation if the directors have acted fraudulently. Also, if that is what has happened, who were the auditors of WS and what checks and controls were they saying should be in place to prevent the potential for any misuse of client funds?

From another BB

WorldSpreads to be closed over alleged fraud

By Simon Mundy

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.
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The board of WorldSpreads was set to make an application to the High Court for an administration order on Sunday, and the insolvency proceedings will be announced formally on Monday, sources close to the situation said. The shortfall in the client funds is estimated at between £10m and £12m.
Some people close to the process had suggested on Friday that a takeover of the company, through a so-called “pre-pack administration”, might be negotiated over the weekend. IG Group and London Capital Group were among the companies mooted as potential bidders. However, both companies decided not to pursue an acquisition.

WorldSpreads, founded in Ireland in 2000, listed on London’s Aim market in 2007. Its insolvency will be managed by KPMG under the Financial Services Authority’s new special administration regime, designed to ensure a faster insolvency process for financial groups.

However, it raises the prospect of a lengthy legal struggle as nearly 5,000 clients of WorldSpreads try to recover the funds they deposited with the company. The first £50,000 of each account is protected under the Financial Services Compensation Scheme, but clients owed larger sums – a group likely to include some other spread betting companies – may not receive the full value of their accounts.
The situation will draw comparisons with the insolvency of MF Global, the US brokerage which failed to segregate clients’ money as required by law. UK clients have criticised the handling of the insolvency by the FSA and KPMG, administrator to the brokerage’s UK arm, arguing that clients in other countries have had money returned more quickly.

It is also likely to prompt criticism of Ernst & Young, WorldSpreads’ auditor, for signing off on annual accounts at a time when the alleged fraud was being carried out. E&Y said it could not comment for confidentiality reasons.
The accounting irregularities were discovered on Friday morning, as the company’s new executive team inspected its accounts, according to Lindsay McNeile, chairman of WorldSpreads. Two days previously, Conor Foley, chief executive, and Niall O’Kelly, financial director, had left the company with immediate effect. Neither has been accused of any wrongdoing.

Mr McNeile, who assumed an executive role on Wednesday, said that the discovery had “hit us with enormous force in a dark tunnel”. Among the company’s non-executive directors is Charlie McCreevy, a former Irish finance minister and European Commissioner, who joined the board in June last year. Mr McCreevy could not be reached for comment.