Brokers to face betting firm levy
Firms to pay £20m levy for compensation to clients of stockbroking firm and WorldSpreads
Investment brokers in britain face a £20 million to levy to pay for compensation for clients of a British stockbroking firm and WorldSpreads, the Irish-founded spread betting firm that closed last year with £13 million missing from clients’ accounts.
The levy is £5 million less, according to FT Adviser, than had been originally estimated by the Financial Services Compensation Scheme (FSCS).
The scheme could not be contacted yesterday to clarify the percentage each client will recover.
WorldSpreads went into bankruptcy in March 2012 after it emerged it had less than £17 million put aside to cover the £29.7 million put in by clients, as required its operating licence – a disclosure that prompted sharp criticism of British financial regulators.
In a statement filed last August during the company's insolvency proceedings, the company's chairman, Lindsay McNeile, said the company had mixed client money with its own, while falsifying its accounts to hide mounting losses.
Special administrators KPMG last month said clients with less than £50,000 held on account by WorldSpreads would not get any more from the administrators or the FSCS once they had been paid their agreed balance by the FSCS.
“The joint special administrators have made provision for any clients who disagree with their balance. Following resolution of such claims, any payment due will be made in respect of these amounts,” said KPMG.
Last November the High Court in London approved the first distribution to clients of WorldSpreads Ltd of three pence in the pound, while the joint special administrators declared a second distribution to clients of five pence last month.