Stockbrokers’ costly collapse

THE collapse of stockbrokers W&R Morrogh is expected to cost the Investor Compensation Fund €5.2 million it has emerged.

The annual report of the fund administrator the Investor Compensation Company Limited (ICCL) published yesterday reveals that while €5.2m has been set aside for out of pocket Morrogh investors, just €2.2m has, to date, been paid by way of compensation to investors.

The Cork-based stockbroking house of W&R Morrogh was closed by the Irish Stock Exchange on 18 June 2001 when a €10m shortfall in funds was uncovered.

The ICCL report reveals that 2,567 claims have been received from Morrogh clients, administrator Grace has rejected 127 claims, certified 579.

The report said the remainder of claims relate to electronically held stock and the fate of these claims cannot be resolved until the High Court adjudicates on applications made by Mr Grace.

“At this stage, there are no clear indications as how the court will decide the issues and consequently it is not possible to accurately predict the final outcome for the ICCL in respect of compensation payable. A provision for compensation payable and costs in the order of €5.2m has been provided for in the accounts of the ICCL,” the report states.

“This is based on an estimate, prepared by the administrator at the request of the ICCL, of compensation costs payable in the event the High Court decides the stock held in the order of W&R Morrogh (or, as applicable, Morrogh Nominees) Ltd which can be identified to purchases made for particular clients will be returned to those clients.”