Client Monies Go Missing at WorldSpreads

WorldSpreads are (or perhaps I should say were?) an AIM listed spread betting broker, famous in this part of the world for offering "zero spreads" on some popular instruments as long as you sent them £5000 up front.  This morning their website has taken on a whole new look. After an obviously hasty redesign over the weekend it now says:

Upon the application of the directors of WorldSpreads Limited, the High Court has today appointed Jane Moriarty and Samantha Bewick of KPMG LLP as joint special administrators of WorldSpreads Limited, under the Special Administration Regime (SAR). WorldSpreads Limited is a wholly owned subsidiary of WorldSpreads plc, a company incorporated in Dublin, Ireland.

The administration of Worldspreads Limited follows the discovery of accounting regularities which the company became aware of during the course of Friday 16 March 2012. Following this it quickly became apparent that there was a shortfall in client monies and the directors and their advisors concluded that the best course of action, in order to mitigate losses for clients, would be to place the company into special administration.

In events rather reminiscent of the MF Global fiasco, albeit on a smaller scale, it now seems as though it might take quite a while for WorldSpreads customers to be able to withdraw any money from their accounts. We will watch with interest to see whether British and Irish law is any more effective at returning supposedly "segregated" funds to their rightful owners than United States law has thus far proved to be.

I wonder how much will be left in the pot after the special administrators and other legal eagles have taken their cut, and how much the Financial Services Compensation Scheme (FSCS for short) will eventually cough up.  According to The Financial Services Authority (FSA for short):

The joint special administrators will review the client cash holdings positions and will return as much cash as possible directly to each client as soon as practicable. However, clients should be aware that any shortfall in the client money accounts will impact the amount of money that can be returned.

Depending on individual circumstances customers may have access to the Financial Services Compensation Scheme (FSCS) should there be any losses. Customers should contact the special administrators to understand more about implications for them personally.

Customers of WorldSpreads should contact the joint special administrators for more information on 020 3284 8829.