Suspended firm tells clients it remains 'solvent'
Marketspreads is "hugely disappointed" with the Central Bank's decision to force it to suspend client services, it said yesterday.
The Dublin-based financial spread-betting company was instructed by the Central Bank on Thursday to halt the provision of investment services to new clients and to suspend the provision of additional investment services to existing clients.
The watchdog said that Marketspreads recently filed accounts for 2009 on which the firm's auditors were unable to express an opinion.
"In light of this, the Central Bank considers it necessary in the interest of the proper and orderly regulation and supervision of an investment firm and for the protection of investors to suspend the activities of Marketspreads," said a Central Bank statement.
The Central Bank said it had been working with Marketspreads' management to address "legacy financial issues" and had told the firm to engage an accountant to review its client accounts "with a view to providing assurances to the Central Bank that all client liabilities are matched with segregated funds as reported by the directors".
The Central Bank said the work was "well advanced". That report, being prepared by Grant Thornton, is due to be lodged with the watchdog on Tuesday.
Marketspreads, which is headed by John McGlade and John McNicholl, had unsuccessfully sought a High Court injunction on Thursday seeking to prevent the Central Bank's move against it.
It told its own clients that it remained "solvent and profitable" and that its client funds were fully segregated. It also insisted that the Central Bank had given its operations the all-clear just two weeks ago.
While the Central Bank has told Marketspreads that it cannot release any client funds until at least the Grant Thornton report has been reviewed, the spread-betting company said yesterday that it had requested the Central Bank to allow it to release those funds. It said they were "100pc segregated and intact".
The Marketspreads business was originally part of Worldspreads, but the operation was acquired by Brian O'Neill as part of a management buyout.
Marketspreads recently settled a case with Mr O'Neill and another former executive of the firm, Fergus Rice. The company said the pair had diverted funds from the firm to another entity with which they were involved.
Marketspreads had sought the repayment of €1.7m. Both men agreed to judgments against them of €1.68m each.
Worldspreads, with which Marketspreads has not been connected since the 2010 buyout, was placed into administration by the UK's Financial Services Authority last month after it emerged there was a €12m shortfall in its customer accounts. There had been hopes it could be sold as a going concern, but they were dashed last week.