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Screenshot of a breaking news alert e-mail from Q2 2017
As if the WorldSpreads collapse story wasn’t ugly enough already…. the Telegraph reported over the weekend that in addition to figuring out what exactly happened to missing client funds, the FSA is also looking at claims that WorldSpreads’ directors misled clients into placing bets on the company’s fortunes in order to inflate its share price.
The fear is that WorldSpreads encouraged clients to enter into long bets on its own shares through the company, despite spread-betting firms being prohibited from giving financial advice.
We understand from sources close to the situation that both the FSA, and police in the UK, are under (understandable) pressure to sort through exactly what happened, and who at WorldSpreads knew what and when, especially with regards to the missing client money at WorldSpreads. The total amounts in play are not huge – about £13 million ($21 million) in client money is missing. However given that WorldSpreads was one of just three publicly traded financial spreadbetting firms (IG Group and London Capital Group being the others), and that WorldSpreads’ largest individual shareholder Conor Foley brazenly declared that his leaving the CEO position at the company just two days prior to when the missing-client-funds scandal broke was completely unrelated, there is a lot of interest in bringing to justice any individuals who may have been involved in any wrongdoing.
In the meantime, a group of WorldSpreads creditors owed (each) in excess of £100,000 have joined to form the WorldSpreads Action Group, dedicated to looking at numerous avenues of possible recourse, which they say includes potential action against the directors, their insurers and the auditors (Ernst & Young).