Morrogh clients to get €10 million
The Investor Compensation Company Limited(ICCL), which administers the Investor Compensation Fund, published its Annual Report for 2003-2004 yesterday.
The report reveals that the total anticipated compensation bill arising out of the closure of W&R Morrogh in April of 2001 will now come to €10m - double the original estimate and €3m more that the ICCL were budgeting for a year ago.
“A further provision of e13m was made in the ICCL’s Accounts in the current year for the estimated compensation costs in the Morrogh case. The additional provision is necessary to meet the revised estimates of compensational losses which will have to be met by the ICCL due to the impact of the fees, costs and expenses of the receivership on client assets,” the ICCL said.
Up to 30% of the €10m to €11m in shares belonging to the clients of former Cork stockbrokers will be used to pay some of the €5m plus costs run up by the receiver since the company was “hammered” in April of 2001.
The additional €3m will be used by the ICCL to defray losses of up to €12,500 incurred by Morrogh clients whose shares will be used to pay close to pay the costs of receiver/manager Tom Grace of PricewaterhouseCoopers.
It is expected that shares and ICCL compensation payments will be sent to former Morrogh clients early in the new year. However, clients with claims on the €6m to €7m in cash being administered by Mr Grace will have to wait at least two years “and possibly more” before any cash will be released, a spokesman for Mr Grace had told the Irish Examiner.
The ICCL annual report states: “To date, 794 (W&R Morrogh) claims have been dealt with and compensation payments amounting to €3.06 million have been made.
The ICCL is still awaiting certification of the remaining claims by the Administrator. This will be done following the Receiver’s implementation of High Court rulings relating to various matters including costs of the Receivership.”
The proposed €10 million pay out by the ICCL leaves the A Fund almost broke. The A Fund has a reserve of just a reserve of just under €385,000 which is totally inadequate to meet any claims which may be lodged against it arising from a fresh default situation. However, this is expected to be replenished to the tune of €1.8 million between now and next July as industry contributions come in.
The A Fund covers claims against 233 entities which include stockbrokers, credit institutions that provide investment services and certain specified persons who provide investment business services.
In comparison the B Fund, which covers restricted activity investment product intermediaries (RAIPIs), life assurance intermediaries, composite insurance intermediaries, non-life insurance intermediaries, tied insurance agents and certain other certified persons, has a reserve of €6,992,660.
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