The Definition:
“Window dressing” to make their balance sheet look good at the end of each quarter.
We have to ask ourselves first of all how and why a company like Worldspreads suddenly started to see losses in the last year.
Has the activity of window dressing been going on for the last two to three years?
This was not a problem created overnight or a one day job but a carefully planned HEIST!. I am not here to try and create a conspiracy theory but to try and get some facts straight. I have studied the balance sheet of Worldspreads now several times and within the last year they all most doubled the expenditure. Worldspreads has invested heavily in its IT systems as well as its mobile interface.
That explains it all doesn’t it............
THE MASSIVE PR STUNT TO ACCUMULATE BIG DEPOSITS:
1) OPEN 13 Branches all over the world to give us a Multinational Stage.
2) Hire a team of board members that have international presence.
3) Introduce zero spreads into the market- NO SPREAD BETTING COMPANY MAKES MONEY ON ZERO SPREADS. The Scheme was started exactly a year ago to show the general public that "We can still make money even by keeping zero spreads" all a part of the PR to accumulate massive deposits from clients in my humble opinion.
4) They advertised on Bloomberg to get the confidence of Traders.
A year later comes the fall:
The Statement is as below:
WorldSpreads said it would post a full- year loss after an “unusual pattern of client trading.”
Surely this would affect all of the brokers/SB companies! Either that or all of the traders at Worldspreads are in the top 5% that win in the profession of trading.
“THIS IS NOT A FAILURE OF A COMPANY IT IS A FRAUD”
“Window dressing” to make their balance sheet look good at the end of each quarter.
We have to ask ourselves first of all how and why a company like Worldspreads suddenly started to see losses in the last year.
Has the activity of window dressing been going on for the last two to three years?
This was not a problem created overnight or a one day job but a carefully planned HEIST!. I am not here to try and create a conspiracy theory but to try and get some facts straight. I have studied the balance sheet of Worldspreads now several times and within the last year they all most doubled the expenditure. Worldspreads has invested heavily in its IT systems as well as its mobile interface.
That explains it all doesn’t it............
THE MASSIVE PR STUNT TO ACCUMULATE BIG DEPOSITS:
1) OPEN 13 Branches all over the world to give us a Multinational Stage.
2) Hire a team of board members that have international presence.
3) Introduce zero spreads into the market- NO SPREAD BETTING COMPANY MAKES MONEY ON ZERO SPREADS. The Scheme was started exactly a year ago to show the general public that "We can still make money even by keeping zero spreads" all a part of the PR to accumulate massive deposits from clients in my humble opinion.
4) They advertised on Bloomberg to get the confidence of Traders.
A year later comes the fall:
The Statement is as below:
WorldSpreads said it would post a full- year loss after an “unusual pattern of client trading.”
Surely this would affect all of the brokers/SB companies! Either that or all of the traders at Worldspreads are in the top 5% that win in the profession of trading.
“THIS IS NOT A FAILURE OF A COMPANY IT IS A FRAUD”
Absolutely correct.
ReplyDeleteI wouldn't wonder if the spread size competition has come to an end. The bookies have to pay into the FSCS fund. Such busts and the payouts to betrayed clients will increase this fee so the operating costs rise.
Plus clients will prefer the safety and availability of their funds over minimal spread size differences in the time coming.
I am afraid that most of the spread betting industry is all about this type of business. The only way they can make money in my opinion is by customers losing and betting the other way. They will all probably go bust at some point besides maybe fxcm and igindex who are pretty big. Remember the ceo's have no morales about doing a fraud because in the first place they are only there to get your money. It is not like they are trying to help society in health of science or doing something substancial to the world rather they are only out there to get your money hoping that you will loose. When you have this attitude and an oppertunity comes before you to do a fraud the temtation is too big.
ReplyDeleteHi, I'm one of the guys who had a few cent over at worldspreads..
ReplyDeleteAnyway; The guys who've fooled us can't be so dumb that they would just take the money and "vanish" as thats pretty much impossible nowadays - they must have had it all planned out in another manor....
Which led me to this; What they have done is totally legal as we, meaning us who've invested our money into WS, knew that they had the right to do whatever they wanted with the money transferred to them - it's in the contract we agreed upon when signing up...
I guess they can take the money and do whatever they want with it as we've granted them permission to do just that - Am I right? :(
I still have my account in WorldSpreads with no funds. Back in 2009 I was trading RBS an wile trying to sell the platform did not allow me, I was speaking over the phone with one of their agents and at the end nothing happend, I lost my money. I currently have nothing on my account, does that mean that I am protected by FSA fraud scheme or I just lost my money...
ReplyDeleteThere are three groups that carry responsibility for this situation and should each be the subject of litigation by KPMG to recover the missing funds.They are the Auditors,the Directors and the FSA themselves.
ReplyDeleteThe Auditors
The Auditors appear to have competely failed to carry out the duties expected of an Auditor.The reconciliation of client balances with the actual cash held is just so basic an Audit function for a spreadbetting company that it beggars belief that they failed to do so.Also, the accounts have been presented in such a way that can only have been intended to mislead.The cash position of the company is presented as an aggregate figure, a mix of client and company cash! as if the client cash was the company`s.IG Group in contrast only put company money in the balance sheet, not client money.IG state in their accounts that "Segregated client money accounts hold statatory trust status restricting the Groups ability to control the monies and accordingly such amounts are not held on the Groups Statement of Financial poaition".How could Ernst and Young have allowed WS to have presented client money as a company asset on the Worldspreads Statement of Financial position?
Also, WS dont disclose the balances held at Brokers in the accounts.This is because the margin calls would often exceed the reported company cash level and so would have made it obvious that the margins posted for hedges must have come from client balances.There must have been lots of people within WS who knew full well that the margins being posted into the market execeded the reported company cash level.In the Feb 28th trading statement the company said it had 7m EUR of cash(£6m), but it must have been obvious to anyone in the firm,and in the brokers and at the FSA that the margins required for the hedges exceeded this amount.
The Directors
In the UK a Director of an FSA registered firm has a legal responsibility a) not to trade while insolvent and b)To ensure client assets are segregated. Some of these Directors knowingly breached these obligations while others failed to do their jobs with sufficient care to prevent it.In particular, what are Non Executive Directors for if it is not to ensure that the Executive Directors are running the company properly?.Too many Non Execs see their role as banking the £50K a year for attending 4 Board meetings a year and quaffing champange at Cheltenham. They competely failed to protect anyone.What questions did they ask?,what reassurances did they seek?.
The FSA
The FSA rules on client segregation are a joke.There very existence is worse than not having them if the FSA are not going to ensure that it happens. Any client seeking reassurance about the safety of their money held at Worldspreads was told that their money was completely safe because it was segregated and in the event of Worldspreads going bust, client money was ringfenced.The result was that many clients kept balances at Worldspreads that they simply would not have done if they thought that a Worldpread bankruptcy would take their money with them.The FSA reassurance led to many investors leaving more money with Worldspreads than they would have done if the rules were not there.IF the FSA are not going to make sure the rules are followed they are actually RAISING the prospect of clint losses, not reducing them, by creating a false sense of security and an opportunity for a dodgy company to reassure a sceptical client.If the FSA segregation rules had not existed I would not have deposited as much money as I did with them.
The scale of the negligence by so many parties in this sorry affair suggests that KPMG should be looking to recover the FULL shortfall from the guilty parties. Most of the Directors and Auditors have liability insurance and so I urge KPMG to instigate litigation ASAP.
Dear Anonymous Mar 20, 2012 01:02 PM,
ReplyDeleteVery will written article and I shall post this with a refrence to yourself.Thanks for your support and time