Despite the missing funds, KPMG is hopeful that clients will get all their money back. Clients had on average just £2,000 each on balance with the company, well below the £50,000 automatic protection given under the Financial Services Compensation Scheme (FSCS).
The FSCS, funded by the financial services industry, will be liable for any shortfall after recoveries made by the administrators. At its peak, the Dublin-based company, which listed on Aim in 2007, was worth about £40m. Shareholders are not expected to recover anything. WorldSpreads had no loans bar a small working capital facility.
The sudden collapse and allegations of fraud raised questions about the sudden departures last week of chief executive Conor Foley, WorldSpreads’ founder and largest shareholder, and its finance director of eight years, Niall O’Kelly.
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Mr Foley released a statement, saying: “[He] wishes to make it clear that the first he learned of these issues was on Friday morning last, at the same time as the rest of the board. His decision to step down earlier last week was completely unrelated to these issues.”
Mr O’Kelly had originally tendered his resignation in February after a profits warning. At the time, the company said it “maintains a strong balance sheet with net cash of €7m [£5.8m]”.
The collapse of WorldSpreads will also pose questions for its auditors, Ernst & Young. E&Y declined to comment yesterday.
Rivals are now believed to be considering offers for WorldSpreads’ client list and technology platform. It had recently embarked on an aggressive global expansion, with moves into South Africa, Israel and Europe. ETX Capital is reported to have already held discussions with KPMG. It is not clear what will happen to the company’s 66 staff, most of whom are based in London.
KPMG will retain them “to support the orderly wind down of the business”, but it said “unfortunately, redundancies are likely”. The Financial Services Authority is investigating the “accounting irregularities” and has asked the police to look at the situation. The police declined to comment.
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