ISE concedes Morrogh ‘flaw’

THE Irish Stock Exchange (ISE) has conceded that the liquidation of stockbrokers W&R Morrogh has exposed major weaknesses in Irish law, leading to an unsatisfactory process of winding up the firm.

The views of ISE chairman David Kingston, come in the wake of an open letter by the Morrogh Investment Action Group (MIAG) to Minister for Finance Charlie McCreevy, Central Bank Governor John Hurley, and Mr Kingston.

The Morrogh investors said they had been treated like abject mendicants since W&R Morrogh, formerly of 74 South Mall, Cork, went into liquidation with a shortfall of over 10m in April 27, 2001, ending an unbroken Morrogh family business dating back to 1887.

The private investors are up in arms that more than €3m will be taken from their personal investments in public companies, which had been held in trust by the defunct brokerage house, to pay the fees of receiver Tom Grace, of PricewaterhouseCoopers.

In a letter replying to MIAG, Mr Kingston told the disgruntled investors that he shared their frustrations, and was aware of the hardship suffered by Morrogh investors.

"The Irish Stock Exchange wants to promote investment in the market, and central to this is the protection of investors both for the common good, and as a critical factor in the success of our business. Clearly the manner in which Morrogh became insolvent, and the subsequent process of receivership is not satisfactory.

"What has been exposed is the inadequacy of the winding-up process for financial institutions generally, and financial intermediaries in particular," stated Mr Kingston.

Mr Kingston disclosed that the ISE was seeking to have the law altered to simplify any future instances of default affect client assets.