Investors urged to use British brokers

EQUITY investors who want to trade shares regularly should use British stockbrokers until the status of shares held in trust by Irish stockbrokers is changed to safeguard investors’ interests, the Consumer Association warned last night.

Consumer Association finance spokesman Eddie Hobbs’ advice comes following the impact of a High Court judgment which undermines the secure status of billions of euro worth of shares held in trustee accounts and electronically.

In a default situation, the assets of stockbrokers’ clients can be used to pay the costs of winding up the firm following a precedent-setting judgment by Mr Justice Roderick Murphy.

Mr Justice Murphy’s ruling in the W&R Morrogh case that the costs, fees and expenses of the receiver be paid for out of the “client assets of the firm” after the stockbroking firm went into receivership has put shares held in trust at risk, according to Mr Hobbs.

Earlier this week, Irish Financial Services Regulatory Authority’s prudential director Patrick Neary advised investors with billions of euro in shares held in trust to get their hands on their share certificates to avoid their assets being seized in a default situation,

At the time Mr Neary cautioned that investors would face difficulties and extra costs in selling or buying shares if they opted to hold the share in physical share certificate form.

Spokesman David Cliffe of the Financial Services Authority in Britain said that client assets of a defaulting stockbroker in Britain are kept separate from the company.

However, if there are costs associated with the administering of client assets then the costs of this work, and this work only may come from those assets, according to Mr Cliffe.