WorldSpreads enters FSA’s explained by professional Forex trading experts the “WorldSpreads enters FSA’s” FX trading team.
WorldSpreads enters FSA’s
The FSA will formally announce Monday morning that it has placed WorldSpreads in its Special Administration Regime (or “SAR”). After a weekend spent going through WorldSpreads records and accounts, and the unwillingness of any other firm to buy WorldSpreads, the FSA and special advisor KPMG decided to wind down WorldSpreads’ operations, and return as much cash as possible to clients.
As we reported earlier today, sources including the Financial Times report that as much as £12 million in client money is missing.
This is the third use of SAR, introduced in early 2011, under which the FSA has power to decide what to do with both the company and client assets in cases such as these. The other two uses were just last week with Pritchard Stockbrokers Ltd., and back in October with the more-recognizable case of MF Global. The SAR powers for the FSA were introduced in response to weaknesses revealed in the UK’s insolvency rules and process following the collapse of Lehman Brothers back in 2008.
We understand that there were attempts made to get one of WorldSpreads healthy competitors, including IG Group and London Capital Group, to take over the company with the FSA’s backing in a pre-packaged administration. However we also understand that these talks did not get very far, mainly due to the (understandable) reluctance of other firms to get involved in a sticky situation. As well, there was deemed to be not much upside in an acquisition, as many of WorldSpread’s 5,000+ clients also have accounts at these other firms. Why pay to buy what you already have?
WorldSpreads enters FSA’s Conclusion
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