Morrogh shares pay-back set to begin

CLIENTS of failed stockbrokers W&R Morrogh are to get their hands on two-thirds of the €10 million in shares held by the firm in the coming weeks.

However, Morrogh clients with close to €8m in cash lodged with the 'hammered" stockbrokers will have to wait up to three years to get their money back, and even then they are expected to receive between 30 cents to 35 cents in the €1.

The High Court appointed receiver/manager Tom Grace of PriceWaterhouseCoopers (PWC) is expected to commence the process of returning shares to beleaguered clients at the end of the month, more than four years since the collapse of the company on April 26, 2001.

PWC staff are now ready to start returning shares in numerous public companies held on their behalf on a trustee basis by Morrogh to brokers nominated by the clients in a process commenced earlier this year. Morrogh clients who have failed to nominate a broker to take electronic delivery of the shares will have their assets sold and the proceeds returned to them.

It is understood that the receiver/manager is to retain close to 28.5% of the value of the shares held in trust at the end of April 2005 to defray the estimated VAT inclusive €5.2m in costs, expenses, broker costs and legal fees the winding-up of the firm is expected to require. To date only the lawyers have received their fees.

The transfer of shares will commence at the end of this month in or around June 29 when, coincidentally, former Morrogh junior partner Stephen Pearson, 44, faces a series of charges under the Larceny Act and Forgery Act in the Circuit Criminal Court in Dublin. These charges relate to the biggest securities fraud in the history of the State which precipitated the collapse of W&R Morrogh when close to €5.8m in shareholders funds were misappropriated.

It is believed that PWC staff expect to have the share transfer process completed by the end of August in a process which will see the shares transferred to nominate brokers on anequity-by-equity basis.

While most Morrogh clients who held shares are expected to receive their shares by September, individual clients with in excess of €1m in cash each lodged with the company will have to wait for close to three years to get a their final payments.

These payments are expected to be just one-third of the monies held for them & in 2001. However, some Morrogh clients will already have received close to €20,000 in compensation from the Central Bank-administered Investor Compensation Fund, which expects to pay-out a total of €10m as a direct result of the collapse of the firm.

Other Morrogh clients will also have received compensation from other third party sources including insurance firms, and/or the registrars of shares which were misappropriated.