SPREAD-BETTING firm WorldSpreads was forced into administration yesterday after the discovery of “accounting irregularities” proved too serious to avoid collapse.
Thousands of clients stand to lose out after the Financial Services Authority (FSA) warned last night that there could be a “shortfall in the client money accounts” but said it will “will return as much cash as possible directly to each client as soon as practicable”.
The company is thought to be short of millions in client funds, although up to £50,000 in losses per account could be covered by the industry-funded Financial Service Compensation Scheme.
The collapse of the AIM-listed betting firm makes it only the third firm ever to go into the FSA’s new special administration regime, a winding-up scheme set up in 2011 for financial firms. The scheme aims to ease out collapsed companies with minimal disruption to market infrastructure, but has yet to be tested by the collapse of a structurally important “too big to fail” organisation.
Shares in WorldSpreads had to be suspended on Friday following the sudden resignation of its founder and chief executive Conor Foley last week. Shortly before its administration, which is being handled by KPMG, the Dublin-based firm had already given investors a profit-warning despite strong revenue growth.