Suspended betting firm releases cash

Marketspreads — the spread-betting firm suspended from trading by the Central Bank last week — has been allowed release cash to clients.

The move could prove a significant step towards the company resuming trading, but could also see anything between €5m and €10m of client cash being returned.

The Central Bank ordered Marketspreads to cease trading last Friday, citing “legacy financial issues” — including proper management of client funds, the firm’s capital adequacy and auditing concerns — as its main concerns. The latter element referred to Marketspreads’ last set of filed accounts, up to the end of 2009, on which the auditors were “unable to express an opinion”.

Marketspreads’ management team said it has been working on rectifyingactions taken by the firm’s previous owners.

Marketspreads came into being in 2009 via the management buyout of the Irish operations of the failed company Worldspreads. Current management also recently secured a judgment against former directors Brian O’Neill and Fergus Rice relating to the diversion of €1.68m to another business.

On the capital adequacy question, it claims €2.5m has been pledged to increase the firm’s capital base by director and shareholder Ray Curran. The Central Bank brought forward a meeting with Marketspreads’ management from today to yesterday.

Before that, the bank said its concerns over client fund management had been eased by an independent review by Grant Thornton.

“Following an independent third-party review of client assets, the Central Bank is amending the direction on Marketspreads to allow for the repayment of client assets. The firm is still suspended from carrying out investment services until such time as it addresses our concerns about its financial statements and capital position,” it added.

For its part, Marketspreads has said its 2010 accounts are being fast-tracked and are likely to receive a clean audit. They should be ready by Apr 23.