Morrogh clients challenge court bid

DISGRUNTLED clients of defunct stockbroking firm W&R Morrogh are to mount a Supreme Court challenge to a High Court decree which ordered that more than €5 million in shares held in their names should be used to pay the estimated €3m costs of receiver Tom Grace.

The Irish stockbroking community was thrown into turmoil following Mr Justice Roderick Murphy’s precedent-setting ruling.

However, an ad hoc group of investors is to lodge an appeal today, the last day possible, against Mr Justice Murphy’s ruling in the name of investor David Beechinor.

“Legal opinion sought indicated that the main issues that qualified for grounds to appeal were the apparent violation of the fundamental and constitutional right of ownership and the apparent removal by the receiver of the traditional protection afforded to property that enjoyed Trustee Status,” a spokesman for the group said.

The group is hoping individual investors, who fear their assets are in peril, will support the court action.

“We estimate that individual contributions will be of the order of between €200 and €1,000 depending on the assets involved and what people think is fair.

"It was decided to mount a vigorous campaign to attract support from other deprived investors and to call a meeting sometime during October when terms of contributions will be formulated.”

However, Mr Justice Murphy’s ruling is further complicated by the fact that, at an early stage of the Morrogh receivership, close to €5m worth of paper share certificates belonging to individual investors, which were in the custody of W&R Morrogh, were returned to their owners.

If Mr Justice Murphy’s ruling is upheld it is not known what impact it will have on these investors in relation to their potential liabilities towards the liquidators costs.

W&R Morrogh went into liquidation with a shortfall of €12m in April 27, 2001, and since then, the value of shares held for clients by the partnership has fallen in value, some by as much as 90%.

W&R Morrogh went ito receivership after junior partner Stephen Pearson became involved in gambling futures and options and his losses led him to embezzle funds from clients.

It emerged at a court hearing that Mr Pearson told receiver Tom Grace that he was the only one involved in the fraud and neither staff nor his partner Alec Morrogh were aware of what he was doing.

It is understood that the Garda Bureau of Fraud Investigation are close to completing a file on the matter, which will be lodged with the Director of Public Prosecutions.