Stockbroker victims claim their shares

IRISH Financial Service Regulatory Authority (IFSRA) chief executive Liam O’Reilly is facing legal action from disgruntled clients of failed stockbroking firm W&R Morrogh unless he orders the firm’s receiver to return €10m in shares to the investors.

Investors who have close to €16 million in shares and cash tied up in the receivership process since the firm went to the wall three years ago have adopted a new tactic to get their hands on their property.

Out-of-pocket Morrogh client Liam Shorten said they believe that Mr Grace should have released their shareholdings to them shortly after the firm went into receivership as, under the Stock Exchange Act 1995, the receiver took up the role of the stockbroker.

Mr Shorten said it is their intention to argue that Mr Grace did not comply with a specific provision of the Stock Exchange Act 1995.

This is refuted by IFSRA.

Mr Shorten said the Act, section 24 (7) (b), states: “The liquidator or receiver of the former authorised member firm shall also be subject to all rules and regulations of the relevant stock exchange and any conditions or requirements imposed under this Act as if the liquidator or receiver were an authorised member firm.” He said that under this section their assets should have been returned to them by the receiver, acting in the role of stockbroker, when they sought their shares three years ago.

Solicitors Conway Kelleher Tobin (CKT), acting for some Morrogh clients including Mr Shorten, have written to Mr O’Reilly asking him to instruct receiver Tom Grace of PricewaterhouseCooper to return shares belonging to Morrogh clients “forthwith”.

A spokesman for Mr Grace said they did not wish to comment on this latest development as they have not received a copy of the correspondence.

In their letter to the IFSRA, CKT call on the regulator to instruct Mr Grace to return their clients’ “shareholdings to them intact and without delay”.

CKT also state: “We further reiterate that our clients have incurred significant losses due to the denial by the receiver of access by our clients to their shares and our clients feel that they are entitled to be compensated for such losses.” CKT have also asked IFSRA to instruct the receiver to: “Enter negotiations for fair compensation for losses incurred by our clients due to the retention of their shareholdings.”

A spokesman for Mr Grace confirmed that it is his intention to seek the permission of the High Court in July to make payments to the 2,500 investors whose €16.5m funds have been effectively frozen in the liquidation process.