Custom House Capital failure costs State €15m
Claims by investors who lost out in the failure of Dublin firm Custom House Capital have cost the State’s investor compensation fund €19.7 million, but €4.7 million of this will be covered by an insurance policy.
The Investor Compensation Company Limited, the independently-run fund for out-of-pocket investors in failed regulated entities, had €29 million remaining in two funds at the end of July to cover further losses from that or another firm.
The company can also draw on a credit facility of €50 million and has insurance to cover losses exceeding this amount.
The firm can also seek “top-up” contributions from the 4,692 investment firms and investment intermediaries who provide for the company’s two compensation funds beyond their annual contributions.
The company said there was no requirement for this as it was funded for possible losses.
The €15 million net cost of Custom House Capital, the investment firm liquidated last year, to the compensation company is almost twice the cost of Cork-based Morrogh Stockbrokers which failed in 2001.
The company can pay out up to €20,000 to investors who lose out in the failure of a regulated investment company.
George Treacy, chief operating officer and one of two Central Bank inspectors appointed by the High Court to investigate Custom House last year, said 1,958 investors of the company had made claims on the firm.
Investors could still file a claim for compensation but the Central Bank must support the claims, given that the deadline had passed, he said. Custom House, run by businessman Harry Cassidy, was put into liquidation after it was found to have deliberately misused €56 million of client funds for shortfalls in property investments.