CFD gamble cost Elan investors €50m

A SOPHISTICATED form of gambling caused a small group of Irish investors to lose €50 million when the price of Elan shares crumbled last Monday.

Private clients of a number of Dublin stockbroking firms suffered the sharp losses after buying Contracts For Difference (CFDs), one of the riskiest forms of investing in a publicly-quoted company that allows large amounts of money to change hands on the back of share price movements. Traders in CFDs agree to pay the difference between the opening and closing value of a share or stock market index, such as the FTSE 100.

The instruments allow investors to take a view on a share price without owning the share or having automatic voting or dividend rights.