High-fliers and clients pay heavy price for risk

How are the mighty fallen. They were the highfliers in a staid world of Irish stockbroking, making millions on the back of daring dealings in high-risk stocks. Now the directors of MMI Stockbrokers (in liquidation) are being targeted by the liquidator Mr Tom Kavanagh, who believes £1.9 million (€2.4 million) has been misappropriated.

At the heart of the investigation lies the liquidator's belief that money from offshore funds, which the Central Bank alleges had been controlled by some directors, was used to minimise the exposure of directors and people close to them when the tide turned against MMI and its massive exposure to Dana, for which it was the company stockbroker.

Needless to say, the directors in question vigorously deny any wrongdoing and a courtroom battle between the two sides seems inevitable.

While the movements of funds is likely to dominate any further discussion of MMI, it is surely amazing that any company would stake its future on the risky roll-over deals in Dana shares which were such a feature of MMI's business. Bear in mind that such deals could only work for as long as the share price rose and all bull markets must end. On top of that, when trouble did arrive, the company was so massively overexposed to one risky share that huge losses were inevitable.

Forget about the movement of funds, would you do business with such an operation? And what questions does it raise for regulation?